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Here's Why You Should Add Masimo (MASI) to Your Portfolio 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 preliminary fourth-quarter 2023 performance and a few regulatory approvals, is expected to contribute further. However, concerns regarding overdependence on its Signal Extraction Technology (SET) unit and macroeconomic factors persist.
This Zacks Rank #2 (Buy) company’s shares have risen 13.8% year to date compared with the industry’s 7.3% growth. The S&P 500 has witnessed a 6.9% rise in the said time frame.
The renowned global provider of non-invasive monitoring systems has a market capitalization of $7 billion. The company projects 2.6% growth for 2024 revenues. Masimo’s earnings yield of 2.6% 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, thereby raising our optimism. In January, the FDA approved Masimo SET-powered MightySat Medical Pulse Oximeter to be sold over-the-counter without prescription. In December 2023, Masmo received the FDA 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 MASI’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. Additionally, the company continues to collaborate with Cercacor on R&D activities related to advancing rainbow technology and other technologies.
Strong Q4 Results: Masimo’s fourth-quarter 2023 results buoy 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 reverting 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: MASI’s consumer products are generally considered non-essential and discretionary. 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 the demand for these products, which could affect Masimo’s business.
Estimate Trend
MASI has been witnessing a positive estimate revision trend for 2024. In the past 60 days, the Zacks Consensus Estimate for its earnings per share has moved north 8.4% to $3.48.
The Zacks Consensus Estimate for the company’s first-quarter 2024 revenues is pegged at $488.5 million, indicating a 13.6% decline from the year-ago quarter’s reported number.
Some other top-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Cardinal Health, Inc. (CAH - Free Report) and Cencora (COR - Free Report) .
DaVita, carrying a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 12.1%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 35.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have risen 67.4% compared with the industry’s 22.4% growth in the past year.
Cardinal Health, carrying a Zacks Rank of 1 at present, has an estimated long-term growth rate of 15.9%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 15.6%.
CAH’s shares have risen 51.6% compared with the industry’s 14% growth in the past year.
Cencora, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 9.8%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 6.7%.
Cencora’s shares have rallied 53.2% in the past year compared with the industry’s 1.1% growth.
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Here's Why You Should Add Masimo (MASI) to Your Portfolio 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 preliminary fourth-quarter 2023 performance and a few regulatory approvals, is expected to contribute further. However, concerns regarding overdependence on its Signal Extraction Technology (SET) unit and macroeconomic factors persist.
This Zacks Rank #2 (Buy) company’s shares have risen 13.8% year to date compared with the industry’s 7.3% growth. The S&P 500 has witnessed a 6.9% rise in the said time frame.
The renowned global provider of non-invasive monitoring systems has a market capitalization of $7 billion. The company projects 2.6% growth for 2024 revenues. Masimo’s earnings yield of 2.6% 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, thereby raising our optimism. In January, the FDA approved Masimo SET-powered MightySat Medical Pulse Oximeter to be sold over-the-counter without prescription. In December 2023, Masmo received the FDA 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 MASI’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. Additionally, the company continues to collaborate with Cercacor on R&D activities related to advancing rainbow technology and other technologies.
Strong Q4 Results: Masimo’s fourth-quarter 2023 results buoy 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 reverting 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: MASI’s consumer products are generally considered non-essential and discretionary. 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 the demand for these products, which could affect Masimo’s business.
Estimate Trend
MASI has been witnessing a positive estimate revision trend for 2024. In the past 60 days, the Zacks Consensus Estimate for its earnings per share has moved north 8.4% to $3.48.
The Zacks Consensus Estimate for the company’s first-quarter 2024 revenues is pegged at $488.5 million, indicating a 13.6% decline from the year-ago quarter’s reported number.
Masimo Corporation Price
Masimo Corporation price | Masimo Corporation Quote
Other Key Picks
Some other top-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Cardinal Health, Inc. (CAH - Free Report) and Cencora (COR - Free Report) .
DaVita, carrying a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 12.1%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 35.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have risen 67.4% compared with the industry’s 22.4% growth in the past year.
Cardinal Health, carrying a Zacks Rank of 1 at present, has an estimated long-term growth rate of 15.9%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 15.6%.
CAH’s shares have risen 51.6% compared with the industry’s 14% growth in the past year.
Cencora, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 9.8%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 6.7%.
Cencora’s shares have rallied 53.2% in the past year compared with the industry’s 1.1% growth.