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Here's Why You Should Hold on to Masimo (MASI) Stock Now

Zacks Equity Research

Masimo Corporation MASI is likely to gain from a slew of positive developments. However, the company has been experiencing weakness in its Royalty and Other revenues for quite some time.

In a year, shares of Masimo have rallied 52.3% compared with the industry’s 22.5% growth. Meanwhile, the S&P 500 Index has risen 31%.

With a market capitalization of $8.50 billion, Masimo develops, manufactures and markets a family of non-invasive monitoring systems. The company’s earnings are anticipated to grow 23% over the next five years. In the trailing four quarters, it delivered a positive earnings surprise of 7.9%, on average.

 

 

Let’s delve deeper into the factors that substantiate the company’s Zacks Rank #3 (Hold).

Factors to Boost Masimo

The company has been riding on a slew of positive developments in recent times.

Notably, Masimo recently announced the expansion of its partnership with Dräger, where the latter will integrate Masimo’s technologies to help clinicians assess brain function, oxygenation and ventilation status. Per Masimo’s management, Dräger will add Masimo SedLine Brain Function Monitoring, O3 Regional Oximetry, and NomoLine Capnography measurements to its comprehensive suite of advanced measurement parameters. This is likely to boost the demand for Masimo’s unique offerings.

Earlier, Masimo announced that Radius Capnography, a portable real-time capnograph with wireless Bluetooth connectivity, received the CE marking.

Reflective of these, the company issued solid guidance for 2019.

It expects product revenues of $932 million compared with earlier communicated $925 million. Notably, this suggests reported growth of 12.3% and cc growth of 13.1%. Adjusted earnings per share are now expected to be $3.18 compared with previously stated $3.15.

Factors Deterring the Stock

Recently, Masimo’s Royalty and Other revenues totaled $95,000, significantly down on a year-over-year basis. In fact, management expects no meaningful contribution from the unit in 2019. Furthermore, Masimo expects foreign currency headwinds to impact its 2019 top line.

Masimo Corporation Price and Consensus

 

Masimo Corporation Price and Consensus

Masimo Corporation price-consensus-chart | Masimo Corporation Quote

Estimate Trend

For 2019, the Zacks Consensus Estimate for revenues is pegged at $932.9 million, indicating an improvement of 8.7% from the year-ago quarter’s reported figure. For adjusted earnings, the same stands at $3.17 per share, suggesting growth of 4.6% from the year-ago reported figure.

Stocks to Consider

A few better-ranked stocks from the broader medical space are CONMED Corporation CNMD, HealthEquity HQY and West Pharmaceutical Services WST. While HealthEquity sports a Zacks Rank #1 (Strong Buy) at present, CONMED and West Pharmaceutical each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Conmed has a long-term earnings growth rate of 17%.

HealthEquity has a long-term earnings growth rate of 25%.

West Pharmaceuticals has a long-term earnings growth rate of 14%.

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Masimo Corporation (MASI) : Free Stock Analysis Report
 
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