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MASI or STE: Which Is a Better Investment Option Right Now?

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U.S. medical device companies are regarded globally for innovation. These companies have a competitive advantage over players from other industries, courtesy of big data analytics, biotechnology and software development.

The medical device fraternity is likely to gain from the recent deferral of the 2.3% Medical Device tax. The companies plan to hike R&D spending which will provide them a competitive edge in the long haul.

Per an article by Emergo, the industry is projected to attain to $173 billion through 2019.

Masimo Corp. (MASI - Free Report) and STERIS plc (STE - Free Report) are two close contenders in the Medical Instruments space.

Notably, the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Masimo has a Growth Score of A, while the same for STERIS is B. This instils investors’ optimism in the stock. Our research shows that stocks with a Growth Score of A or B, combined with a Zacks Rank #1 or 2, are profitable picks.

Here, we make a detailed analysis of the companies’ fundamentals to determine which is currently better positioned.

With a market cap of $5.05 billion, Masimo develops, manufactures and markets a family of non-invasive monitoring systems.Based in Ohio, STERIS develops, manufactures andmarkets infection prevention as well assurgical support products and services.

Factors Driving the Stocks

Masimo has a strong international presence. Recently, the California-based company’s technologies were integrated by UAE Ministry of Health & Prevention (MOHAP) in nine hospitals. A raised guidance for 2018 also buoys optimism.

STERIS’ focus on inorganic expansion has been a positive. The company’s acquisition of U.K.-based outsourced sterilization services provider — Synergy Health plc — is a significant move. In November 2017, the company sold the Synergy Health Healthcare Consumable Solutions (HCS) business to Vernacare.

Price Performance

In the past year, STERIS’ shares have gained 28.9%, significantly above Masimo’s rise of 6.4%. The Medical Instruments industry has declined 3.2% in the same time frame.

Estimate Revision


The Zacks Consensus Estimate for Masimo’s current-year earnings per share is pegged at $2.89, reflecting a growth of 18% from the previous year. The same for STERIS is projected at $4.71, indicating a growth of 13.5%.


The Zacks Consensus Estimate for Masimo’s current-year revenues is pegged at $843.8 million, showing growth of 5.7% from the previous year. STERIS is expected at $2.75 billion, reflecting growth of 5%.

STERIS plc Price and Consensus

STERIS plc Price and Consensus | STERIS plc Quote

Thus, Masimo has a competitive advantage over STERIS, considering current-year earnings and revenue estimates.

Fundamental Growth Story

Since 2009, Masimo’s revenues totaled $798 million, at a CAGR of 10.9%. Since 2009, the company’s earnings reached $2.82, at a CAGR of 15.5%.

Over the same period, STERIS’ sales amounted to $2.61 billion at a CAGR of 9.1%. The company’s earnings have increased to $3.77 at a CAGR of 8.7%.

Here too, Masimo beats STERIS.

In Conclusion

Our comparative analysis indicates that Masimo is positioned better than STERIS, considering current-year projections and fundamentals.

Want More From the Industry?

A few other top-ranked stocks in theMedical Instruments space are Integer Holdings Corporation (ITGR - Free Report) and IDEXX Laboratories, Inc (IDXX - Free Report) .

Integer Holdings carries a Zacks Rank #2. The company has a stable foothold in the cardiac, neuromodulation space and non-medical power solutions market.

IDEXX carries a Zacks Rank #2. The company has been gaining from solid performance of the core Companion Animal Group segment.

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