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Masimo (MASI) Q1 Earnings Beat Estimates, Margins Expand

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Masimo Corporation (MASI - Free Report) reported first-quarter 2020 adjusted earnings per share (EPS) of 97 cents, which surpassed the Zacks Consensus Estimate of 88 cents. Earnings improved 22.8% from the year-ago quarter.

The company’s total revenues (including Royalty) improved 16.4% year over year to $269.6 million. The figure beat the Zacks Consensus Estimate of $251 million.

Segmental Analysis

Product Revenues

Product revenues in the first quarter totaled $269.6 million, up 16.9% from the year-ago quarter and 17.5% at constant currency (cc).

Per management, shipments of non-invasive technology boards and monitors increased 13.2% to 72,100 in the quarter.

Margin Analysis

In the quarter under review, gross profit totaled $185.6 million, up 22.4% year over year. Gross margin was 68.8%, up 339 basis points (bps).

Adjusted operating income in the quarter totaled $68.5 million, up 22.3% from a year ago. Adjusted operating margin expanded 123 bps to 25.4% in the quarter.

Research and development expenses totaled $27.2 million, up 27.2%.

SG&A expenses in the quarter grossed $89.9 million, up 21.1%.

Masimo Corporation Price, Consensus and EPS Surprise

 

Masimo Corporation Price, Consensus and EPS Surprise

 

Masimo Corporation price-consensus-eps-surprise-chart | Masimo Corporation Quote

2020 Guidance

Given the uncertainties surrounding the COVID-19 pandemic, the company is not issuing guidance for 2020.

In Conclusion

Masimo exited the first quarter on a strong note. The company continues to gain from key Product segment, which witnessed solid growth in the quarter. The company’s non-invasive technology shipments also surged in the quarter. In fact, management foresees increased shipments for the quarters ahead. Expansion in gross and operating margin is a positive. The recent launch of the MasimoSafetyNet, designed to help fight the coronavirus pandemic, buoys optimism. The outbreak has boosted demand for the company’s products among direct and OEM customers.

On the flip side, Masimo’s Royalty and Other segment saw no contribution during the quarter. Further, the company faces fierce competition from MedTech bigwigs.

Zacks Rank and Key Picks

Masimo currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space are Pacific Biosciences of California, Inc. (PACB - Free Report) , ViewRay and ResMed Inc. (RMD - Free Report) , each carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Pacific Biosciences’ first-quarter 2020 revenues is pegged at $20.1 million, suggesting a year-over-year improvement of 22.3%. The same for loss stands at 15 cents, indicating a year-over-year rise of 25%.

The Zacks Consensus Estimate for ViewRay’s first-quarter 2020 revenues is pegged at $12.5 million, suggesting a year-over-year fall of 38.5%. The same for loss stands at $20 cents, indicating year-over-year growth of 41.2%.

The Zacks Consensus Estimate for ResMed’s third-quarter fiscal 2020 revenues is pegged at $722.3 million, suggesting year-over-year improvement of 9.1%. The same for EPS stands at $1.04, indicating growth of 16.9% from the year-ago reported figure.

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