Yahoo Finance Merit Medical (MMSI) Hits 52-Week High: What's Aiding It?
Shares of Merit Medical Systems, Inc. MMSI scaled a new 52-week high of $86.44 on Jun 28, before closing the session slightly lower at $85.95.
Over the past year, this Zacks Rank #3 (Hold) stock has gained 4.2% against the 2.2% decline of the industry. The S&P 500 has witnessed 23.7% growth in the said time frame.
Over the past five years, the company registered earnings growth of 15.2% compared with the industry’s 12.9% rise. The company’s long-term expected growth rate of 10.8% compares with the industry’s growth projection of 11.2%. Merit Medical’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 9.3%.
MMSI is witnessing an upward trend in its stock price, prompted by its strong product portfolio. The optimism led by a solid first-quarter 2024 performance and its continued spend on research and development (R&D) are expected to contribute further. However, concerns regarding the lack of direct sales and marketing capabilities and higher consolidation in the healthcare industry persist.
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Let’s delve deeper.
Key Growth Drivers
Strong Product Portfolio: Merit Medical has continued to gain significant momentum on the back of new products, raising our optimism. This month, the company announced the U.S. commercial release of the basixSKY Inflation Device.
The same month, Merit Medical received the FDA’s 510(k) clearance for its Siege Vascular Plug. The company also announced the launch of its Bearing nsPVA Express Prefilled Syringe in the United States and Australia.
Continued Spend on R&D: Merit Medical’s R&D operations have been central to its historical growth and are believed to be critical to its continued growth. In recent years, the company’s focus on innovation has led to the introduction of several new products, improvements to its existing products, and expansion of its product lines, as well as enhancements and new equipment in its R&D facilities. This raises our optimism.
Strong Q1 Results: Merit Medical’s robust first-quarter 2024 results buoy optimism. The company witnessed a year-over-year uptick in the top and bottom lines. The company also saw revenue growth in both its segments and across the majority of the product categories within its Cardiovascular unit. Robust performances in the United States and outside were also registered. The expansion of both margins was also recorded.
Downsides
Lack of Direct Sales and Marketing Capabilities: Merit Medical lacks direct sales and marketing capabilities in many countries, including China, Japan, Russia and India. The company wholly depends on third-party distributors for the commercialization of products in these countries. Per management, because of inefficiencies in the distributor base, Merit Medical often fails to successfully commercialize its products in these countries.
Higher Consolidation in the Healthcare Industry: Healthcare costs have risen significantly over the past decade. Thus, to provide healthcare solutions at a cheaper rate and eradicate competition, large-cap MedTech behemoths have started consolidating with mid-cap and small-cap companies. This enables the availability of healthcare products at cheap prices in the market. Per management, such trends compel Merit Medical’s customers to ask for price concessions on its products, which act against the ongoing business strategies. This may also exert a solid downward pressure on the prices of Merit Medical’s products and reduce the customer base.
Key Picks
Some better-ranked stocks in the broader medical space are DaVita Inc. DVA, LeMaitre Vascular, Inc. LMAT and Ecolab Inc. ECL.
DaVita, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 13.6%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 29.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DaVita’s shares have gained 37.5% compared with the industry’s 11% rise in the past year.
LeMaitre Vascular, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 18.5%. LMAT’s earnings surpassed estimates in each of the trailing four quarters, with the average being 10.1%.
LeMaitre Vascular has gained 22.8% against the industry’s 2.1% decline in the past year.
Ecolab, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 14.3%. ECL’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 1.3%.
Ecolab’s shares have rallied 27.6% against the industry’s 14.8% decline in the past year.
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Ecolab Inc. (ECL) : Free Stock Analysis Report
DaVita Inc. (DVA) : Free Stock Analysis Report
Merit Medical Systems, Inc. (MMSI) : Free Stock Analysis Report
LeMaitre Vascular, Inc. (LMAT) : Free Stock Analysis Report
