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Here's Why You Should Retain Masimo (MASI) Stock for Now
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Masimo Corporation (MASI - Free Report) is well-poised for growth in the coming quarters, courtesy of its research and development (R&D) efforts. The optimism led by a solid third-quarter 2023 performance and a few regulatory approvals are expected to contribute further. However, concerns regarding overdependence on its Signal Extraction Technology (SET) and macroeconomic concerns persist.
Over the past year, this Zacks Rank #3 (Hold) stock has lost 26.9% compared with the industry’s 0.1% decline. The S&P 500 has witnessed 20.6% growth in the said time frame.
The renowned global provider of non-invasive monitoring systems has a market capitalization of $6.25 billion. The company projects 3.9% growth for 2024 and expects to maintain its strong performance. Masimo’s earnings yield of 2.7% compares favorably with the industry’s negative yield.
Image Source: Zacks Investment Research
Let’s delve deeper.
Regulatory Approvals: Masimo has been receiving regulatory approvals for its products over the past few months, raising our optimism. Last month, the company announced the receipt of the FDA’s clearance for Stork for prescription use with healthy and sick infants aged 0-18 months.
In November, Masimo announced the receipt of the FDA’s 510(k) clearance for over-the-counter and prescription use of the Masimo W1 medical watch.
Research and Product Development: We are upbeat about Masimo’s ongoing R&D efforts, which it believes are essential to its success. Its R&D efforts focus on continuing to enhance its technical expertise toward its existing product portfolios and expanding its technological leadership in each of the markets Masimo serves with innovations, among others. Additionally, Masimo continues to collaborate with Cercacor on R&D activities related to advancing rainbow technology and other technologies.
Strong Q3 Results: Masimo’s third-quarter 2023 results buoy our optimism. Per management, its healthcare business is transitioning away from COVID-era conditions. Also, management is beginning to see customer behavior and sensor purchasing patterns shifting back to the pre-pandemic growth trend line.
Downsides
Overdependence on Masimo SET: Masimo currently derives the majority of its revenues from its primary product offerings like the Masimo SET platform, Masimo rainbow SET platform and related products. Thus, the company’s business is highly dependent on the continued success and market acceptance of its primary product offerings.
Macroeconomic Concerns: Masimo’s consumer products are generally considered non-essential, discretionary products. As such, many of these products can be especially sensitive to general downturns in the economy. Negative macroeconomic conditions such as high inflation, recession and decreasing consumer confidence can adversely impact demand for these products, which could negatively impact Masimo’s business.
Estimate Trend
Masimo has been witnessing a negative estimate revision trend for 2023. In the past 90 days, the Zacks Consensus Estimate for its earnings per share has moved south by 11.3% to $3.06.
The Zacks Consensus Estimate for the company’s fourth-quarter 2023 revenues is pegged at $542.9 million, suggesting a 12% decline from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Merit Medical Systems, Inc. (MMSI - Free Report) and Integer Holdings Corporation (ITGR - Free Report) .
DaVita, presently sporting a Zacks Rank #1 (Strong Buy), has an estimated long-term growth rate of 17.3%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 36.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have gained 37.9% compared with the industry’s 9.1% rise in the past year.
Merit Medical, carrying a Zacks Rank of 2 (Buy) at present, has an estimated long-term growth rate of 11.5%. MMSI’s earnings surpassed estimates in each of the trailing four quarters, with the average being 14.4%.
Merit Medical has gained 12.9% compared with the industry’s 9% rise in the past year.
Integer Holdings, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 15.8%. ITGR’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 11.9%.
Integer Holdings’ shares have rallied 41.9% against the industry’s 0.1% decline in the past year.
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Here's Why You Should Retain Masimo (MASI) Stock for Now
Masimo Corporation (MASI - Free Report) is well-poised for growth in the coming quarters, courtesy of its research and development (R&D) efforts. The optimism led by a solid third-quarter 2023 performance and a few regulatory approvals are expected to contribute further. However, concerns regarding overdependence on its Signal Extraction Technology (SET) and macroeconomic concerns persist.
Over the past year, this Zacks Rank #3 (Hold) stock has lost 26.9% compared with the industry’s 0.1% decline. The S&P 500 has witnessed 20.6% growth in the said time frame.
The renowned global provider of non-invasive monitoring systems has a market capitalization of $6.25 billion. The company projects 3.9% growth for 2024 and expects to maintain its strong performance. Masimo’s earnings yield of 2.7% compares favorably with the industry’s negative yield.
Image Source: Zacks Investment Research
Let’s delve deeper.
Regulatory Approvals: Masimo has been receiving regulatory approvals for its products over the past few months, raising our optimism. Last month, the company announced the receipt of the FDA’s clearance for Stork for prescription use with healthy and sick infants aged 0-18 months.
In November, Masimo announced the receipt of the FDA’s 510(k) clearance for over-the-counter and prescription use of the Masimo W1 medical watch.
Research and Product Development: We are upbeat about Masimo’s ongoing R&D efforts, which it believes are essential to its success. Its R&D efforts focus on continuing to enhance its technical expertise toward its existing product portfolios and expanding its technological leadership in each of the markets Masimo serves with innovations, among others. Additionally, Masimo continues to collaborate with Cercacor on R&D activities related to advancing rainbow technology and other technologies.
Strong Q3 Results: Masimo’s third-quarter 2023 results buoy our optimism. Per management, its healthcare business is transitioning away from COVID-era conditions. Also, management is beginning to see customer behavior and sensor purchasing patterns shifting back to the pre-pandemic growth trend line.
Downsides
Overdependence on Masimo SET: Masimo currently derives the majority of its revenues from its primary product offerings like the Masimo SET platform, Masimo rainbow SET platform and related products. Thus, the company’s business is highly dependent on the continued success and market acceptance of its primary product offerings.
Macroeconomic Concerns: Masimo’s consumer products are generally considered non-essential, discretionary products. As such, many of these products can be especially sensitive to general downturns in the economy. Negative macroeconomic conditions such as high inflation, recession and decreasing consumer confidence can adversely impact demand for these products, which could negatively impact Masimo’s business.
Estimate Trend
Masimo has been witnessing a negative estimate revision trend for 2023. In the past 90 days, the Zacks Consensus Estimate for its earnings per share has moved south by 11.3% to $3.06.
The Zacks Consensus Estimate for the company’s fourth-quarter 2023 revenues is pegged at $542.9 million, suggesting a 12% decline from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Merit Medical Systems, Inc. (MMSI - Free Report) and Integer Holdings Corporation (ITGR - Free Report) .
DaVita, presently sporting a Zacks Rank #1 (Strong Buy), has an estimated long-term growth rate of 17.3%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 36.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have gained 37.9% compared with the industry’s 9.1% rise in the past year.
Merit Medical, carrying a Zacks Rank of 2 (Buy) at present, has an estimated long-term growth rate of 11.5%. MMSI’s earnings surpassed estimates in each of the trailing four quarters, with the average being 14.4%.
Merit Medical has gained 12.9% compared with the industry’s 9% rise in the past year.
Integer Holdings, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 15.8%. ITGR’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 11.9%.
Integer Holdings’ shares have rallied 41.9% against the industry’s 0.1% decline in the past year.