Merit Medical Systems, Inc. ( MMSI Quick Quote MMSI - Free Report) is well-poised for growth in the coming quarters, backed by its strong product portfolio. A robust third-quarter 2022 performance, along with its solid international exposure, is expected to contribute further. However, headwinds related to higher consolidation in the healthcare industry and the lack of direct sales and marketing capabilities persist.
So far this year, this Zacks Rank #2 (Buy) stock has gained 17.1% against a 12.3% decline of the
industry and a 17% decline of the S&P 500.
This renowned medical-devices provider has a market capitalization of $4.24 billion. The company is projected to record 11% growth over the next five years on the back of its continued strong segmental performance. It delivered an earnings surprise of 25.35% for the past four quarters, on average.
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Let’s delve deeper.
Strong Product Portfolio: We are upbeat about Merit Medical’s continued gains on the significant momentum of its new products. We are also optimistic about the company’s product pipeline, including radio and electrophysiology products. Last month, the company announced the launch of the SCOUT Mini Reflector, which has been designed for use in soft tissues, such as breast and lymph nodes.
The company, in April, launched the ReSolve Thoracostomy Tray, which has all products needed for performing a thoracostomy.
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 the third quarter of 2022, Merit Medical confirmed that its international sales (42.7% of net sales) improved 6.1% from the corresponding period of 2021. This included increased sales of 5.7% in APAC operations, 17.4% in Rest of the World operations and 4.7% in EMEA operations. Strong Q3 Results: Merit Medical’s robust third-quarter 2022 results buoy optimism. The company also saw solid segmental growth and growth across all product categories within its Cardiovascular unit. Solid product sales and robust performances in the United States and outside were also witnessed. Strong execution and improving customer demand trends raised the overall top line. Expansion of the adjusted operating margin also bodes well. Risk 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 products in countries like China, Japan, Russia and India. Per management, because of inefficiencies in the distributor base, Merit Medical often fails to commercialize its products in these countries successfully. Estimate Trend
Merit Medical is witnessing a rising estimate trend for 2022 and 2023. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved north from $2.47 to $2.57 for 2022 and from $2.77 to $2.82 for 2023.
The Zacks Consensus Estimate for the company’s fourth-quarter 2022 revenues is pegged at $289.76 million, suggesting a 4.1% rise from the year-ago quarter’s reported number. The consensus estimate for earnings stands at 67 cents per share, implying a decline of 5.6% year over year.
Other Key Picks
Some other top-ranked stocks from the broader medical space are
ShockWave Medical ( SWAV Quick Quote SWAV - Free Report) , SmileDirectClub ( SDC Quick Quote SDC - Free Report) and HealthEquity ( HQY Quick Quote HQY - Free Report) , each carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .
The Zacks Consensus Estimate for ShockWave Medical’s earnings per share has been stable at $2.57 for 2022 and has risen from $3.42 to $3.56 for 2023 in the past 60 days. SWAV has rallied 25.2% so far this year. ShockWave Medical delivered an earnings surprise of 146.1%, on average, in the last four quarters.
Loss estimates for SmileDirectClub have narrowed from earnings of 75 cents to 73 cents for 2022 and from 61 cents to 60 cents for 2023 in the past 60 days. SDC stock has risen 19.4% so far this year. SmileDirectClub delivered a negative earnings surprise of 1.08%, on average, in the last four quarters.
HealthEquity’s earnings per share estimates have increased from $1.28 to $1.29 for fiscal 2023 and from $1.76 to $1.79 for fiscal 2024 in the past 60 days. HQY has rallied 36.7% so far this year. HealthEquity’s earnings are anticipated to improve 26.3% over the next five years.