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Here's Why You Should Retain Merit Medical (MMSI) Stock For Now
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Merit Medical Systems, Inc. (MMSI - Free Report) is well poised for growth in the coming quarters, backed by its strong product portfolio. A strong fourth-quarter 2021 performance, along with its solid international exposure, is expected to contribute further. However, headwinds due to stiff competition, as well as lack of direct sales and marketing capabilities, persist.
Over the past year, this Zacks Rank #3 (Hold) stock has gained 6.6% compared with 8.3% growth of the industry and a 13% rise of the S&P 500 composite.
The renowned medical devices provider has a market capitalization of $3.65 billion. The company projects 10.5% growth for the next five years and expects to maintain its strong performance. It has delivered an earnings surprise of 35.4% for the past four quarters, on average.
Image Source: Zacks Investment Research
Let’s delve deeper.
Strong Product Portfolio: We are upbeat about Merit Medical’s continued gains on the back of significant momentum of new products. We are also optimistic about the company’s product pipeline, including its radio and electrophysiology products.
Merit Medical, in March, announced that it has received the FDA’s breakthrough device designation for its product Embosphere Microspheres for the Genicular Artery Embolization indication.
International Exposure: We are upbeat about Merit Medical’s current global operations, including its territories in Europe, the Middle East, Africa, Asia, Oceania, Central and South America, Mexico, and Canada. In 2021, the company’s international sales grew 12.6% over 2020 and accounted for 43% of net sales.
During the fourth quarter of 2021, Merit Medical confirmed that it recorded 7%, 14%, and 17% revenue upticks at constant exchange rate in the APAC, EMEA and Rest of the World regions, respectively. APAC sales, excluding the impact of the divestiture of the ITL business, increased 12% year over year.
Strong Q4 Results: Merit Medical’s robust fourth-quarter 2021 results buoy optimism. The company saw revenue growth in the quarter in both its Cardiovascular and Endoscopy segments, as well as across the majority of product categories within its Cardiovascular unit. Solid product sales are also promising. Robust performances in both the United States and outside are impressive. Strong execution and improving customer demand trends pushed up the overall top line, which is encouraging. Expansion of both margins also bodes well.
Downsides
Stiff Competition: Merit Medical operates in highly competitive markets. It faces competition from many companies that are larger, and have greater market presence and resources than Merit Medical. The company competes globally in several market areas, including radiology, diagnostics and interventional cardiology. Such resources and market presence may enable MMSI’s competitors to market competing products more efficiently or at reduced prices in order to gain market share.
Lack of Direct Sales and Marketing Capabilities: Merit Medical lacks direct sales and marketing capabilities in many countries. The company wholly depends on third-party distributors for the commercialization of its products in countries like China, Japan, Russia and India. Per management, because of inefficiencies in the distributor base, Merit Medical often fails to successfully commercialize its products in these countries.
Estimate Trend
Merit Medical is witnessing a positive estimate revision trend for 2021. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 3.8% north to $2.49.
The Zacks Consensus Estimate for the company’s first-quarter 2022 revenues is pegged at $263.5 million, suggesting a 5.9% rise from the year-ago quarter’s reported number.
Key Picks
A few stocks from the broader medical space that investors can consider are AMN Healthcare Services, Inc. (AMN - Free Report) , Edwards Lifesciences Corporation (EW - Free Report) and Henry Schein, Inc. (HSIC - Free Report) .
AMN Healthcare has an estimated long-term growth rate of 16.2%. AMN’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 20%. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has gained 39.4% against the industry’s 54.1% fall over the past year.
Edwards Lifesciences, carrying a Zacks Rank #2 (Buy), has an estimated long-term growth rate of 13.9%. EW’s earnings surpassed estimates in three of the trailing four quarters, the average surprise being 6.5%.
Edwards Lifesciences has gained 40.8% compared with the industry’s 1.6% growth over the past year.
Henry Schein has an estimated long-term growth rate of 11.8%. HSIC’s earnings surpassed estimates in the trailing four quarters, the average surprise being 25.5%. It currently has a Zacks Rank #2.
Henry Schein has gained 27.1% compared with the industry’s 8.3% growth over the past year.
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Here's Why You Should Retain Merit Medical (MMSI) Stock For Now
Merit Medical Systems, Inc. (MMSI - Free Report) is well poised for growth in the coming quarters, backed by its strong product portfolio. A strong fourth-quarter 2021 performance, along with its solid international exposure, is expected to contribute further. However, headwinds due to stiff competition, as well as lack of direct sales and marketing capabilities, persist.
Over the past year, this Zacks Rank #3 (Hold) stock has gained 6.6% compared with 8.3% growth of the industry and a 13% rise of the S&P 500 composite.
The renowned medical devices provider has a market capitalization of $3.65 billion. The company projects 10.5% growth for the next five years and expects to maintain its strong performance. It has delivered an earnings surprise of 35.4% for the past four quarters, on average.
Image Source: Zacks Investment Research
Let’s delve deeper.
Strong Product Portfolio: We are upbeat about Merit Medical’s continued gains on the back of significant momentum of new products. We are also optimistic about the company’s product pipeline, including its radio and electrophysiology products.
Merit Medical, in March, announced that it has received the FDA’s breakthrough device designation for its product Embosphere Microspheres for the Genicular Artery Embolization indication.
International Exposure: We are upbeat about Merit Medical’s current global operations, including its territories in Europe, the Middle East, Africa, Asia, Oceania, Central and South America, Mexico, and Canada. In 2021, the company’s international sales grew 12.6% over 2020 and accounted for 43% of net sales.
During the fourth quarter of 2021, Merit Medical confirmed that it recorded 7%, 14%, and 17% revenue upticks at constant exchange rate in the APAC, EMEA and Rest of the World regions, respectively. APAC sales, excluding the impact of the divestiture of the ITL business, increased 12% year over year.
Strong Q4 Results: Merit Medical’s robust fourth-quarter 2021 results buoy optimism. The company saw revenue growth in the quarter in both its Cardiovascular and Endoscopy segments, as well as across the majority of product categories within its Cardiovascular unit. Solid product sales are also promising. Robust performances in both the United States and outside are impressive. Strong execution and improving customer demand trends pushed up the overall top line, which is encouraging. Expansion of both margins also bodes well.
Downsides
Stiff Competition: Merit Medical operates in highly competitive markets. It faces competition from many companies that are larger, and have greater market presence and resources than Merit Medical. The company competes globally in several market areas, including radiology, diagnostics and interventional cardiology. Such resources and market presence may enable MMSI’s competitors to market competing products more efficiently or at reduced prices in order to gain market share.
Lack of Direct Sales and Marketing Capabilities: Merit Medical lacks direct sales and marketing capabilities in many countries. The company wholly depends on third-party distributors for the commercialization of its products in countries like China, Japan, Russia and India. Per management, because of inefficiencies in the distributor base, Merit Medical often fails to successfully commercialize its products in these countries.
Estimate Trend
Merit Medical is witnessing a positive estimate revision trend for 2021. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 3.8% north to $2.49.
The Zacks Consensus Estimate for the company’s first-quarter 2022 revenues is pegged at $263.5 million, suggesting a 5.9% rise from the year-ago quarter’s reported number.
Key Picks
A few stocks from the broader medical space that investors can consider are AMN Healthcare Services, Inc. (AMN - Free Report) , Edwards Lifesciences Corporation (EW - Free Report) and Henry Schein, Inc. (HSIC - Free Report) .
AMN Healthcare has an estimated long-term growth rate of 16.2%. AMN’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 20%. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has gained 39.4% against the industry’s 54.1% fall over the past year.
Edwards Lifesciences, carrying a Zacks Rank #2 (Buy), has an estimated long-term growth rate of 13.9%. EW’s earnings surpassed estimates in three of the trailing four quarters, the average surprise being 6.5%.
Edwards Lifesciences has gained 40.8% compared with the industry’s 1.6% growth over the past year.
Henry Schein has an estimated long-term growth rate of 11.8%. HSIC’s earnings surpassed estimates in the trailing four quarters, the average surprise being 25.5%. It currently has a Zacks Rank #2.
Henry Schein has gained 27.1% compared with the industry’s 8.3% growth over the past year.