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Merit Medical Hits 52-Week High: What's Driving the Stock?

Zacks Equity Research

Share price of South Jordan, UT-based Merit Medical Systems, Inc. MMSI reached a fresh 52-week high of $26.80 on Dec 9, finally closing a tad lower at $26.60. Currently, Merit Medical carries a Zacks Rank #3 (Hold).

Among the major positives, the stock rallied 43.9% over the past one year, whereas the S&P 500’s grew only 12.3% over the same time frame. It has added roughly 43.1% year to date. Average volume of shares traded over the last three months was remarkable at approximately 326.9k. The stock has a market cap of $1.19 billion. For the majority of the last six months, Merit Medical’s share price trend has considerably outperformed the Zacks categorized Medical/ Dental Supplies sub-industry.

In fact, after posting a stupendous third-quarter 2016 and beating the Zacks Consensus Estimates, shares of Merit Medical have gained almost 18% till Friday’s close.

In the last one month, the stock has gained 15.7%, whereas Medical/Dental Supplies Markets has increased 1.5%.

Positive Estimate Revisions

The estimate revision trend for the current year seems quite favorable for the stock at the moment, with three estimates moving up in the last one month.

The Zacks Consensus Estimate for fiscal 2016 inched up by 2 cents to a penny, over the last 60 days.

Key Catalysts

The leading manufacturer and marketer of proprietary disposable devices, Merit Medical recently announced that it has received 510(k) clearance for SwiftNINJA Steerable Microcatheter from the U.S. FDA.

MERIT MEDICAL Price and Consensus

 

MERIT MEDICAL Price and Consensus | MERIT MEDICAL Quote

Notably, the SwiftNINJA platform is expected to be launched shortly, along with the company’s highly exclusive Corvocet Biopsy System, which has also received the 510(k) clearance.

Earlier this year, Merit Medical also received a 510(k) clearance from the FDA for the Elation Pulmonary Dilation Balloon, which is again a key positive.

We are upbeat about Merit Medical’s HeRo platform. The launch of the proprietary – Super HeRO and HeRO Ally products – in October, also buoyed the company with significant opportunities. Notably, the HeRo product line was acquired by Merit Medical from CryoLife earlier this year. Per management, the ‘Think HeRO Graft Training program’ in the HeRo platform is likely to provide substantial opportunity to the company over the long run.

We are also upbeat about long-term expected growth of the stock which is pegged at 12.5% and projected sales growth of 12.04%, much higher than the industry average of 5.3%. Additionally, positive earnings estimate revisions for 2016, along with a solid expected earnings growth rate, indicate the stock’s potential for further price appreciation in the near term.

Key Picks

Better-ranked stocks in the broader medical sector include Addus HomeCare Corporation ADUS, LHC Group, Inc. LHCG and HMS Holdings Corp. HMSY.

While Addus HomeCare and LHC Group boast a Zacks Rank #1 (Strong Buy), HMS Holdings carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Addus HomeCare has a long-term expected earnings growth rate of approximately 15%. Notably, the stock represents an impressive one-year return of almost 37.4%.

LHC Group has a long-term expected earnings growth rate of 15%. The company has returned almost 19.9% in the last three months.

HMS Holdings has an expected earnings growth of almost 14.3%. The company posted a promising year-to-date return of almost 51.3%.

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