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Merit Medical (MMSI) Rallies 4.8% Post Q3 Earnings Beat

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Merit Medical Systems, Inc. MMSI soared 4.8% on Oct 29 after reporting third-quarter 2020 adjusted earnings per share (EPS) of 42 cents, which beat the Zacks Consensus Estimate of 19 cents by a massive 121.1%. Moreover, the bottom line rose 50% from the year-ago quarter.

Revenues in Details

This Utah-based provider of peripheral and cardiac intervention products reported worldwide revenues of $243.9 million, up 0.4% from the year-ago quarter. On a comparable constant-currency basis, the figure fell 0.1% year over year. The top line surpassed the Zacks Consensus Estimate of $219 million by 11.4%.

The Cardiovascular unit reported third-quarter revenues of $236.4 million, up 0.8% year over year due to an increase of 3% in Peripheral Intervention revenues to $86.8 million. Moreover, revenues from Custom Procedural Solutions rose 22% to $56.4 million. However, revenues from Cardiac Intervention fell 7.7% to $69.1 million. Also, OEM revenues contracted 17% to $24.1 million.

Revenues from the Endoscopy devices totaled $7.6 million, down 12.3% year over year.

Margins

In the quarter under review, gross profit totaled $102 million, down 2% on a year-over-year basis. Gross margin came in at 41.8% of net revenues, down 103 basis points (bps) year over year.

Adjusted operating profit totaled $16.3 million, up 7549.3% year over year.

Adjusted operating margin in the quarter came in at 6.7%, indicating an expansion of 659 bps year over year.

Merit Medical Systems, Inc. Price, Consensus and EPS Surprise

 

Merit Medical Systems, Inc. Price, Consensus and EPS Surprise
Merit Medical Systems, Inc. Price, Consensus and EPS Surprise

Merit Medical Systems, Inc. price-consensus-eps-surprise-chart | Merit Medical Systems, Inc. Quote

Financial Update

The company exited the third quarter with cash and cash equivalents of $44.6 million, down from $49.7 million at the end of the second quarter.

2020 Guidance

Net revenues for 2020 are projected within the range of $950 million to $959 million, indicating a decrease of around 3.5% to 4.5% year over year. The Zacks Consensus Estimate for the same is pegged at $937.9 million.

Adjusted EPS for 2020 is pegged within the range of $1.52 to $1.57. The Zacks Consensus Estimate for the same is pegged at $1.28.

Wrapping Up

Merit Medical exited the third quarter of 2020 on a strong note. It saw overall revenue growth within its Cardiovascular unit. The company is on track to complete the movement of more than 14 production lines and consolidate several facilities before year-end. The CE mark for the Merit WRAPSODY Endoprosthesis Stent System and its commercialization in the European Union continues to buoy optimism. The recent FDA approval for the WRAPSODY Arterial Venous access Efficacy (WAVE) IDE trial is encouraging.

The acquisitions of Cianna Medical and Vascular Insights continue to contribute. Further, the company stands to benefit from the execution of its global growth and profitability plan. A robust pipeline of new products and other internally-developed products instill investor optimism in the stock. Despite COVID-19, the company has witnessed robust demand for several of its critical care products, such as hemodynamic monitoring, peritoneal dialysis catheters and insertion tools apart from its infection control products.

However, we are concerned about the revenue decline at its Endoscopy segment. Contraction in gross margin is a concern as well. Also, stiff competition and higher consolidation in the healthcare industry are dampeners. Further, economic stagnation due to the outbreak adds to the woes.

Zacks Rank and Other Key Picks

Merit Medical currently holds a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader medical space that have already announced their quarterly results are Thermo Fisher Scientific Inc. TMO, Align Technology, Inc. ALGN and AngioDynamics, Inc. ANGO. While Align Technology sports a Zacks Rank #1 (Strong Buy), the other two carry a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Thermo Fisher reported third-quarter 2020 adjusted EPS of $5.63, beating the Zacks Consensus Estimate by 28.8%. Revenues of $8.52 billion surpassed the consensus mark by 10%.

Align Technology reported third-quarter 2020 adjusted EPS of $2.25, which surpassed the Zacks Consensus Estimate by 281.4%. Revenues of $734.1 million outpaced the consensus mark by 38%.

AngioDynamics reported first-quarter fiscal 2021 adjusted EPS of 2 cents against the Zacks Consensus Estimate of a loss per share of 6 cents. Revenues of $70.2 million beat the consensus mark by 6.9%.

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AngioDynamics, Inc. (ANGO) : Free Stock Analysis Report
 
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Align Technology, Inc. (ALGN) : Free Stock Analysis Report
 
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