Here's Why You Should Retain Merit Medical (MMSI) Stock for Now
Merit Medical Systems, Inc. MMSI is well-poised for growth in the coming quarters, courtesy of its strong product portfolio. The optimism led by solid first-quarter 2023 performance and international exposure are expected to contribute further. However, headwinds due to forex woes and stiff competition persist.
Over the past year, this Zacks Rank #3 (Hold) stock has gained 62.7% compared with a 22.2% rise of the industry and a 17.8% growth of the S&P 500.
The renowned medical devices provider has a market capitalization of $4.88 billion. The company projects 11% growth for the next five years and expects to maintain its strong performance. It has delivered an earnings surprise of 20.2% for the past four quarters, on average.
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Let’s delve deeper.
Strong Product Portfolio: Merit Medical has continued to gain significant momentum on the back of new products. The company is upbeat about the product pipeline, including radio and electrophysiology products, raising investors’ optimism. It has several electrophysiology products that are either on track for release or in several other stages of development.
In March, Merit Medical announced the expansion of its SwiftNINJA Steerable Microcatheter product line, which belongs to its delivery systems portfolio.
International Exposure: We are optimistic about Merit Medical’s worldwide product distribution network, which includes territories in Europe, the Middle East, Africa (EMEA) and Asia, among others. During the first quarter of 2023, Merit Medical’s management confirmed that the most upside versus expectations was registered in the EMEA region, where the year-over-year growth was primarily driven by demand in France, Germany, the Middle East and Spain.
Excluding China, sales in APAC also increased, fueled by growth in Japan and strong contributions and growth from sales to customers in both Australia and Korea. In the Rest of World region, Merit Medical’s robust year-over-year growth was driven by solid growth in Latin America, Brazil and Mexico.
Strong Q1 Results: Merit Medical’s robust first-quarter 2023 results buoy optimism. The company witnessed a year-over-year uptick in the top and bottom lines. Solid revenue growth in both its segments and across all the product categories within its Cardiovascular unit was also recorded. Robust performances in the United States and outside were also seen.
Downsides
Forex Woes: Merit Medical has been expanding its operations outside the United States. This has led to the company becoming increasingly subject to market risk relating to foreign currency, which could have a negative impact on its margins and financial results. If the rate of exchange between foreign currencies declines against the U.S. dollar, Merit Medical may not be able to increase the prices charged from its customers for products whose prices are denominated in those respective foreign currencies.
Stiff Competition: Merit Medical operates in highly competitive markets, where it faces competition from many companies with greater resources. The company competes globally in several market areas, including radiology and interventional cardiology. Such resources and market presence may enable the competitors to market competing products more efficiently or at reduced prices to gain market share.
Estimate Trend
Merit Medical is witnessing a positive estimate revision trend for 2023. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 1.4% north to $2.89.
The Zacks Consensus Estimate for the company’s second-quarter 2023 revenues is pegged at $310.2 million, suggesting a 5.2% rise from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Hologic, Inc. HOLX, HealthEquity, Inc. HQY and Boston Scientific Corporation BSX.
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, with an average of 27.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hologic has gained 13.8% compared with the industry’s 16.6% rise in the past year.
HealthEquity, flaunting a Zacks Rank #1 at present, has an estimated long-term growth rate of 22%. HQY’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 9.1%.
HealthEquity has gained 13.7% against the industry’s 13.4% decline over the past year.
Boston Scientific, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11.5%. BSX’s earnings surpassed estimates in two of the trailing four quarters and missed in the other two, the average surprise being 1.9%.
Boston Scientific has gained 42.9% against the industry’s 20.3% decline over the past year.
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Boston Scientific Corporation (BSX) : Free Stock Analysis Report
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Merit Medical Systems, Inc. (MMSI) : Free Stock Analysis Report
HealthEquity, Inc. (HQY) : Free Stock Analysis Report
