Medtronic’s (MDT) diabetes care subsidiary, MiniMed Group, has officially kicked off its IPO roadshow in a bid to list as an independent company on the Nasdaq. About 28 million shares of the common stock will be offered to the public at an expected price range of $25 to $28 per share. The company will trade under the ticker MMED.
Medtronic will still hold somewhere between 89% and 90% of the company post-IPO. The funds generated through the IPO will be utilized to strengthen the balance sheet as well as pay for some general expenses. More importantly for investors, the public offering will allow investors to value Medtronic’s diabetes portfolio and the rest of the business separately rather than as a single entity. This could potentially unlock a better valuation in the future. While the IPO doesn’t drastically change anything for the company in the short term, it is part of a multi-year transformation that will eventually help the company increase its focus on the higher-margin parts of the business.
Medtronic is a global medical technology company that develops and manufactures device-based therapies for over 70 different health conditions. The company’s diabetes care business, MiniMed Group, makes continuous glucose monitors, insulin pumps, and other diabetes management devices.
MDT’s one-year performance of 4.6% has underperformed the broader market. However, the trend has been witnessed across the whole healthcare sector, with the Vanguard Health Care Index Fund ETF (VHT) delivering only 7.99% returns during the same period. Medtronic also offers a dividend yield of 2.88%, which makes it a suitable choice for income investors who happily take the performance trade-off for the dividend cushion.
Medtronic has raised its dividend for 48 consecutive years now. The stock still trades at a discount to the Healthcare sector, which is why dividend investors love to accumulate it. Currently, the stock’s forward P/E ratio of 23.29x offers a moderate discount to the five-year average P/E of 25.18x. This valuation is justified by a slow but stable growth, with the company expected to grow its profits by 7.95% in 2027, 7.74% in 2028, and 8.18% in 2029. A payout ratio of 50% shows the company should have no issues continuing to pay dividends while capitalizing on any growth opportunities.
