Abbott vs Medtronic: A Three-Year Outlook on Medical Devices

Abbott has demonstrated a stronger revenue growth trajectory compared to Medtronic, with an average annual growth rate of 5.9% from 2020 to 2023, increasing from $34.6 billion to $40.1 billion. This growth is largely attributed to the medical devices segment, particularly in diabetes sales driven by the FreeStyle Libre product. Abbott's new offerings, such as the Micra AV pacemaker and the Abre venous self-expanding stent system, have also contributed positively to its performance. In contrast, Medtronic has faced challenges, with its stock underperforming the S&P 500 over the same period. While Medtronic's operating margin has improved slightly, it remains lower than Abbott's, indicating that Abbott is managing its costs more effectively despite lower profitability. Abbott's operating margin increased from 15.5% to 16.2%, while Medtronic's rose from 16.3% to 17.1%. Looking ahead, Abbott is expected to continue its growth trajectory, particularly as the impact of declining Covid-19 testing sales diminishes. The company is well-positioned to benefit from increased sales in its medical devices and nutritional products, which should bolster its revenue further. Overall, while Abbott has shown better revenue growth and lower financial risk, Medtronic's profitability metrics suggest it is slightly more profitable at present. However, the outlook favors Abbott, which is anticipated to outperform Medtronic in the coming three years.