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Why Is Masimo (MASI) Down 1.5% Since the Last Earnings Report?

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About a month has gone by since the last earnings report for Masimo Corporation (MASI - Free Report) . Shares have lost about 1.5% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Masimo Beats on Q2 Earnings and Revenues, Guides Up

Masimo Corp. reported earnings of $0.83 per share in the second quarter of 2017, outperforming the Zacks Consensus Estimate of $0.71. The bottom line also improved from the year-ago earnings of $0.49.

Revenues improved 11.8% to $192.9 million from $172.6 million in the year-ago quarter and beat the Zacks Consensus Estimate of $189.0 million.

Quarter Details

Worldwide direct product revenues (87.7% of product revenue) increased 13.8% to $160.3 million. OEM sales (12.3% of product revenues) declined 5.4% to $22.4 million from the year-ago quarter. Total U.S. product revenue decreased 5.0% to $126.5 million on a year-over-year basis.

The company’s Rainbow product revenues in the reported quarter totaled $17.1 million, which was up 14.6% on a year-over-year basis. During the quarter under review, Masimo shipped approximately 50,000 SET Pulse Oximeters and Rainbow SET Pulse CO-Oximeters, excluding handheld units. Per company estimation, its worldwide installed base was 1,545,000 units, as of Jul 1, up 5.9% from 1,459,000 units as of Jul 2, 2016.

Financial Condition

As of Jul 1, Masimo’s total cash and cash investments were $331.4 million compared with $306.0 million as of Dec 31, 2016. The company generated $14.4 million in cash from operations and received $48.2 million in proceeds from stock option exercises.

Guidance

Masimo now expects total fiscal 2017 revenues of approximately $769.0 million, up from the previously provided guidance of $759.0 million. Total fiscal 2017 product revenues are projected at approximately $736.0 million, up from the previous guidance of $727.0 million. Royalty revenues projections increased to approximately $33.0 million from the previously provided guidance of $32.0 million. Fiscal 2017 earnings per diluted share are expected to be approximately $2.80, up from $2.65.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed an upward trend in fresh estimates. There have been four revisions higher for the current quarter compared to one lower.

Masimo Corporation Price and Consensus

 

Masimo Corporation Price and Consensus | Masimo Corporation Quote

VGM Scores

At this time, Masimo's stock has a nice Growth Score of B, however its Momentum is lagging a lot with a F.  The stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is suitable for value and growth investors.

Outlook

Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising.  It comes with little surprise that the stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.




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