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Masimo (MASI) Down 10.2% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Masimo (MASI - Free Report) . Shares have lost about 10.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Masimo due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Masimo Earnings and Revenues Beat Estimates in Q4

Masimo Corporation reported fourth-quarter 2020 adjusted earnings per share of 98 cents, which surpassed the Zacks Consensus Estimate of 87 cents by 12.6%. Earnings also improved 7.6% from the year-ago quarter.

Further for 2020, adjusted earnings per share came in at $3.60, beating the Zacks Consensus Estimate by 3.2%.The bottom line also grew 11.8% year over year.

Revenues

For the fourth quarter, total revenues (including Royalty and other revenues) improved 19.2% year over year to $295.1 million and beat the Zacks Consensus Estimate by 1.9% as well.

Moreover, for 2020, revenues came in at $1.14 billion, up 22% year over year. Meanwhile, the topline was in line with the Zacks Consensus Estimate.

Segmental Analysis

Product Revenues

Product revenues in the fourth quarter totaled $295.1 million, up 19.2% from the year-ago quarter and 18.1% at constant currency (cc).

Per management, shipments of non-invasive technology boards and instruments (excluding handheld and fingertip pulse oximeters) surged 35.2% to 83,000 in the quarter.

Margin Analysis

In the quarter under review, gross profit totaled $186.9 million, up 11.9% year over year. Gross margin was 63.4%, down 409 basis points (bps).

Total operating costs came in at $122 million, up 15.8%.

Operating profit in the quarter totaled $64.9 million, up 5.4% from the year-ago level.  Operating margin contracted 288 bps to 21.9% in the quarter.

Cash Position

The company exited the fourth quarter of 2020 with cash and cash equivalents of $641.4 million compared with $567.7 million at the end of the year-ago period. Cumulative net cash provided by operating activities came in at $210.9 million compared with $221.6 million in the year-ago period.

2021 Guidance

Total revenues are projected at $1.20 billion.The Zacks Consensus Estimate for the metric is pegged at $1.20 billion. Adjusted EPS is projected at $3.80.  The Zacks Consensus Estimate for the same is pegged at $3.76.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

Currently, Masimo has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Masimo has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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