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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, courtesy of its strong product portfolio. The optimism led by solid fourth-quarter 2022 performance and its solid international exposure is expected to contribute further. However, headwinds related to higher consolidation in the healthcare industry and stiff competition persist.
Over the past year, this Zacks Rank #3 (Hold) stock has gained 9.5% against an 8.5% decline of the industry and an 11.5% fall of the S&P 500.
The renowned medical devices provider has a market capitalization of $3.95 billion. The company projects 11% growth for the next five years and expects to maintain its strong performance. It has delivered an earnings surprise of 19.3% 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 radio and electrophysiology products. This 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.
In February, Merit Medical announced that the FDA had granted Breakthrough Device Designation for the SCOUT MD Surgical Guidance System.
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. At the end of 2022, Merit Medical confirmed that its international sales (43.5% of net sales) improved 7.4% from the corresponding period of 2021. This included increased sales of 5.9% in APAC operations, 30.8% in Rest of the World operations and 5.5% in EMEA operations.
Strong Q4 Results: Merit Medical’s robust fourth-quarter 2022 results buoy optimism. The company registered a year-over-year uptick in the top and bottom lines. Revenue growth in its Cardiovascular segment and across the majority of its product categories within its Cardiovascular unit was also recorded. Robust performances in the United States and outside were also seen.
Downsides
Higher Consolidation in the Healthcare Industry: Healthcare costs have risen significantly over the past decade. Thus, to provide healthcare solutions at a cheaper rate and eradicate competition, large-cap MedTech behemoths have started consolidating with mid-cap and small-cap companies.
This enables the availability of healthcare products at low prices in the market. Per management, such trends compel Merit Medical’s customers to ask for price concessions on its products, which acts against its ongoing business strategies. This may also exert a solid downward pressure on the prices of Merit Medical’s products and reduce the customer base.
Stiff Competition: Merit Medical operates in highly competitive markets, where it faces competition from many companies with greater resources. The company competes globally in several market areas, including radiology and interventional cardiology. Such resources and market presence may enable the competitors to market competing products more efficiently or at reduced prices to gain market share.
Estimate Trend
Merit Medical is witnessing a positive estimate revision trend for 2023. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 1.1% north to $2.85.
The Zacks Consensus Estimate for the company’s first-quarter 2023 revenues is pegged at $280.8 million, suggesting a 1.9% rise from the year-ago quarter’s reported number.
This compares to our first-quarter 2023 revenue estimate of $279.6 million, suggesting a 1.5% improvement from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Hologic, Inc. (HOLX - Free Report) , Henry Schein, Inc. (HSIC - Free Report) and Avanos Medical, Inc. (AVNS - Free Report) .
Hologic, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 15.2%. HOLX’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 30.6%.
Hologic has gained 9.6% against the industry’s 14.4% decline in the past year.
Henry Schein, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 8.1%. HSIC’s earnings surpassed estimates in three of the trailing four quarters and matched the same in the other, the average beat being 2.9%.
Henry Schein has lost 9.9% compared with the industry’s 8.5% decline over the past year.
Avanos, carrying a Zacks Rank #2 at present, has an estimated growth rate of 1.8% for 2023. AVNS’ earnings surpassed estimates in all the trailing four quarters, the average beat being 11%.
Avanos has lost 13.5% compared with the industry’s 14.4% decline 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, courtesy of its strong product portfolio. The optimism led by solid fourth-quarter 2022 performance and its solid international exposure is expected to contribute further. However, headwinds related to higher consolidation in the healthcare industry and stiff competition persist.
Over the past year, this Zacks Rank #3 (Hold) stock has gained 9.5% against an 8.5% decline of the industry and an 11.5% fall of the S&P 500.
The renowned medical devices provider has a market capitalization of $3.95 billion. The company projects 11% growth for the next five years and expects to maintain its strong performance. It has delivered an earnings surprise of 19.3% 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 radio and electrophysiology products. This 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.
In February, Merit Medical announced that the FDA had granted Breakthrough Device Designation for the SCOUT MD Surgical Guidance System.
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. At the end of 2022, Merit Medical confirmed that its international sales (43.5% of net sales) improved 7.4% from the corresponding period of 2021. This included increased sales of 5.9% in APAC operations, 30.8% in Rest of the World operations and 5.5% in EMEA operations.
Strong Q4 Results: Merit Medical’s robust fourth-quarter 2022 results buoy optimism. The company registered a year-over-year uptick in the top and bottom lines. Revenue growth in its Cardiovascular segment and across the majority of its product categories within its Cardiovascular unit was also recorded. Robust performances in the United States and outside were also seen.
Downsides
Higher Consolidation in the Healthcare Industry: Healthcare costs have risen significantly over the past decade. Thus, to provide healthcare solutions at a cheaper rate and eradicate competition, large-cap MedTech behemoths have started consolidating with mid-cap and small-cap companies.
This enables the availability of healthcare products at low prices in the market. Per management, such trends compel Merit Medical’s customers to ask for price concessions on its products, which acts against its ongoing business strategies. This may also exert a solid downward pressure on the prices of Merit Medical’s products and reduce the customer base.
Stiff Competition: Merit Medical operates in highly competitive markets, where it faces competition from many companies with greater resources. The company competes globally in several market areas, including radiology and interventional cardiology. Such resources and market presence may enable the competitors to market competing products more efficiently or at reduced prices to gain market share.
Estimate Trend
Merit Medical is witnessing a positive estimate revision trend for 2023. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 1.1% north to $2.85.
The Zacks Consensus Estimate for the company’s first-quarter 2023 revenues is pegged at $280.8 million, suggesting a 1.9% rise from the year-ago quarter’s reported number.
This compares to our first-quarter 2023 revenue estimate of $279.6 million, suggesting a 1.5% improvement from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Hologic, Inc. (HOLX - Free Report) , Henry Schein, Inc. (HSIC - Free Report) and Avanos Medical, Inc. (AVNS - Free Report) .
Hologic, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 15.2%. HOLX’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 30.6%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hologic has gained 9.6% against the industry’s 14.4% decline in the past year.
Henry Schein, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 8.1%. HSIC’s earnings surpassed estimates in three of the trailing four quarters and matched the same in the other, the average beat being 2.9%.
Henry Schein has lost 9.9% compared with the industry’s 8.5% decline over the past year.
Avanos, carrying a Zacks Rank #2 at present, has an estimated growth rate of 1.8% for 2023. AVNS’ earnings surpassed estimates in all the trailing four quarters, the average beat being 11%.
Avanos has lost 13.5% compared with the industry’s 14.4% decline over the past year.