A month has gone by since the last earnings report for Merit Medical (MMSI - Free Report) . Shares have added about 1% in that time frame, underperforming the market.
Will the recent positive trend continue leading up to its next earnings release, or is Merit Medical due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Merit Medical reported second-quarter 2018 adjusted earnings per share (EPS) of 43 cents, beating the Zacks Consensus Estimate by 7.5%. EPS also improved 19.4% from the year-ago quarter’s tally.
The Utah-based provider of peripheral and cardiac intervention products reported worldwide revenues of $224.8 million, up 20.5% from a year ago. Revenues surpassed the Zacks Consensus Estimate by 4.9%. On a constant currency (cc) basis, revenues grossed $221.2 million, up 18.6%.
Per management, organic growth was 9.8% at cc.
Segment Details
The company reports revenues through two segments — Cardiovascular and Endoscopy.
The Cardiovascular unit recorded revenues of $216.4 million, up 20.4% year over year. The upside can be attributed to a 30.2% year-over-year increase in the segment’s stand-alone devices to $92.5 million. Moreover, revenues from catheters increased 21.4% to $39.4 million.
Revenues at the Endoscopy Division totaled $8.42 million, up 22.3% year over year.
Margins
In the quarter under review, gross profit totaled $100 million, up 18.9% on a year-over-year basis.
Per management, adjusted gross margin came in at 48.9%, up 60 basis points (bps). Per management, the improvement was backed by higher production variances and better product mix.
Operating income was $15 million, which improved 13.1% from the prior-year quarter. Operating margin was down 6.7% and contracted 40 bps. Operating expenses shot up to $84.9 million from $70.8 million in the year-ago quarter.
Guidance Raised
The company expects 2018 revenues in the band of $870-$880 million, higher than the prior guidance of $838-$851 million.
Adjusted earnings per share are expected between $1.60 and $1.70, up from the previous range of $1.57-$1.69.
The company expects adjusted gross margins within 48.9-49.4%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Merit Medical has a nice Growth Score of B, though it is lagging a lot on the momentum front with a D. Charting a somewhat similar path, the stock was also allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, MMSI has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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A month has gone by since the last earnings report for Merit Medical (MMSI - Free Report) . Shares have added about 1% in that time frame, underperforming the market.
Will the recent positive trend continue leading up to its next earnings release, or is Merit Medical due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Merit Medical reported second-quarter 2018 adjusted earnings per share (EPS) of 43 cents, beating the Zacks Consensus Estimate by 7.5%. EPS also improved 19.4% from the year-ago quarter’s tally.
The Utah-based provider of peripheral and cardiac intervention products reported worldwide revenues of $224.8 million, up 20.5% from a year ago. Revenues surpassed the Zacks Consensus Estimate by 4.9%. On a constant currency (cc) basis, revenues grossed $221.2 million, up 18.6%.
Per management, organic growth was 9.8% at cc.
Segment Details
The company reports revenues through two segments — Cardiovascular and Endoscopy.
The Cardiovascular unit recorded revenues of $216.4 million, up 20.4% year over year. The upside can be attributed to a 30.2% year-over-year increase in the segment’s stand-alone devices to $92.5 million. Moreover, revenues from catheters increased 21.4% to $39.4 million.
Revenues at the Endoscopy Division totaled $8.42 million, up 22.3% year over year.
Margins
In the quarter under review, gross profit totaled $100 million, up 18.9% on a year-over-year basis.
Per management, adjusted gross margin came in at 48.9%, up 60 basis points (bps). Per management, the improvement was backed by higher production variances and better product mix.
Operating income was $15 million, which improved 13.1% from the prior-year quarter. Operating margin was down 6.7% and contracted 40 bps. Operating expenses shot up to $84.9 million from $70.8 million in the year-ago quarter.
Guidance Raised
The company expects 2018 revenues in the band of $870-$880 million, higher than the prior guidance of $838-$851 million.
Adjusted earnings per share are expected between $1.60 and $1.70, up from the previous range of $1.57-$1.69.
The company expects adjusted gross margins within 48.9-49.4%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Merit Medical has a nice Growth Score of B, though it is lagging a lot on the momentum front with a D. Charting a somewhat similar path, the stock was also allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, MMSI has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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