Masimo Corporation MASI is well-poised for growth in the coming quarters, courtesy of its solid product pipeline. The optimism, led by a solid first-quarter 2023 performance and its focus on patient monitoring, is expected to contribute further. However, concerns regarding overdependence on Masimo SET and stiff competition persist.
Over the past year, this Zacks Rank #3 (Hold) stock has gained 24.5% compared with the industry’s 4.7% rise and the S&P 500's 5% growth.
The renowned global provider of non-invasive monitoring systems has a market capitalization of $8.99 billion. The company projects 3.7% growth for 2023 and expects to maintain its strong performance. Masimo has delivered an earnings surprise of 9.9% for the past four quarters, on average.
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Let’s delve deeper.
Strong Q1 Results: Masimo’s solid first-quarter 2023 results buoy our optimism. The company recorded a robust uptick in the top line, its healthcare business and order shipments in the reported period. The expansion of the company’s installed base was also seen. On the first-quarter earnings call in May, Masimo’s management confirmed having new customers in its pulse oximetry business, and witnessed increasing traction for rainbow and advanced parameter products, which strengthened the healthcare revenues in the quarter.
Product Pipeline: We are upbeat about Masimo’s product pipeline. In May, it announced the launch of Stork, a home baby-monitoring system. The system offers parents insights into their baby’s health data, thereby helping them learn more about and be better connected with their baby.
In March, Masimo unveiled the newest addition to its wearable product line, the Masimo Freedom smartwatch.
Patient-Monitoring in Focus: On the first-quarter 2023 earnings call, Masimo’s management confirmed that its Healthcare revenues in the quarter were driven by a strong performance from Masimo’s rainbow blood constituent monitoring, SedLine and O3 brain monitoring, and Nomoline capnography and gas monitoring products.
In January, Masimo announced the limited market release of Visual Clinical Activity Monitoring, a video analysis system that uses artificial intelligence to help facilitate compliance with hospital hand hygiene protocols.
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.
Stiff Competition: Masimo operates in an intensely competitive medical device industry and is significantly affected by product introductions and other market activities of industry participants. The Masimo SET platform faces additional competition from companies developing products for use with third-party monitoring systems and from companies currently marketing their pulse oximetry monitors.
Masimo has been witnessing a positive estimate revision trend for 2023. In the past 90 days, the Zacks Consensus Estimate for its earnings per share has moved 8.9% north to $4.76.
The Zacks Consensus Estimate for the company’s second-quarter 2023 revenues is pegged at $556.9 million, suggesting a 1.5% decline from the year-ago quarter’s reported number.
Some better-ranked stocks in the broader medical space are Hologic, Inc. HOLX, Merit Medical Systems, Inc. MMSI and DaVita Inc. DVA.
Hologic, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 5.1% for fiscal 2024. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average being 27.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hologic has gained 4.9% compared with the industry’s 4.7% rise in the past year.
Merit Medical, currently carrying a Zacks Rank #2, has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 20.2%.
Merit Medical has gained 38.5% compared with the industry’s 10.4% rise over the past year.
DaVita, carrying a Zacks Rank #2 at present, has a long-term estimated growth rate of 14.6%. DVA’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 17.3%.
DaVita has gained 4.2% against the industry’s 15.9% decline over the past year.
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