Three Reasons to Add Masimo (MASI) Stock to Your Portfolio

·4 min read

Masimo Corporation MASI has been gaining on the back of its solid product pipeline. The optimism led by a solid fourth-quarter 2022 performance and its focus on patient monitoring are expected to contribute further. However, concerns regarding overdependence on Masimo SET and stiff competition persist.

Over the past year, this Zacks Rank #1 (Strong Buy) stock has gained 14.9% against the industry’s 12.9% decline and the S&P 500's 11.3% fall.

The renowned global provider of non-invasive monitoring systems has a market capitalization of $9.29 billion. The company projects 3.5% growth for 2023 and expects to maintain its strong performance. Masimo has delivered an earnings surprise of 9% for the past four quarters, on average.

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Let’s delve deeper.

Strong Q4 Results: Masimo’s solid fourth-quarter 2022 results buoy our optimism. The company recorded a robust uptick in the top line, its healthcare business and order shipments during the reported period. The expansion of the company’s installed base was also seen. Masimo has also been deriving benefits from its acquisition of Sound United, owner of iconic brands such as Bowers & Wilkins, Denon and Marantz, raising our optimism.

Product Pipeline: We are upbeat about Masimo’s product pipeline, where a slew of products is expected to be launched this year. On its fourth-quarter earnings call in March, the company confirmed that the first product in line to be launched will be the medical version of Masimo’s W1 watch, which is currently pending the FDA 510(k) clearance.

The next product to be launched will be the STORK baby monitoring system, which is already receiving strong interest from baby-focused retailers, as Masimo maps out its launch strategy leveraging Masimo Consumer's global reach.

Patient-Monitoring in Focus: On the fourth-quarter 2022 earnings call, Masimo’s management confirmed that in its telemonitoring and telehealth, it will continue to expand its capabilities, both organically and via partnership, to support its home-to-hospital-to-home initiatives and improve access to quality care.

Masimo’s fourth-quarter Healthcare revenues witnessed a robust uptick, fueled by strong performance from Masimo’s rainbow blood constituent monitoring, O3 cerebral oximetry and NomoLine Capnography and gas monitoring products.


Overdependence on Masimo SET: Masimo currently derives the majority of its revenues from its primary product offerings like the Masimo SET platform, Masimo rainbow SET platform and related products. Thus, the company’s business is highly dependent on the continued success and market acceptance of its primary product offerings.

Stiff Competition: Masimo operates in an intensely competitive medical device industry and is significantly affected by new product introductions and other market activities of industry participants. The Masimo SET platform faces additional competition from companies developing products for use with third-party monitoring systems and from companies currently marketing their pulse oximetry monitors.

Estimate Trend

Masimo has been witnessing a positive estimate revision trend for 2023. In the past 90 days, the Zacks Consensus Estimate for its earnings per share has moved 8.9% north to $4.75.

The Zacks Consensus Estimate for the company’s first-quarter 2023 revenues is pegged at $557.3 million, suggesting an 83.2% improvement from the year-ago quarter’s reported number.

This compares to our first-quarter 2023 revenue estimate of $551.4 million, suggesting an 81.3% improvement from the year-ago quarter’s reported number.

Other Key Picks

A few other top-ranked stocks in the broader medical space are Hologic, Inc. HOLX, Henry Schein, Inc. HSIC and Avanos Medical, Inc. AVNS.

Hologic, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 15.2%. HOLX’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 30.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Hologic has gained 6.3% against the industry’s 12.9% decline in the past year.

Henry Schein, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 8.1%. HSIC’s earnings surpassed estimates in three of the trailing four quarters and matched the same in the other, the average beat being 2.9%.

Henry Schein has lost 8.6% compared with the industry’s 7.5% decline over the past year.

Avanos, carrying a Zacks Rank #2 at present, has an estimated growth rate of 1.8% for 2023. AVNS’ earnings surpassed estimates in all the trailing four quarters, the average beat being 11%.

Avanos has lost 8.8% compared with the industry’s 12.9% decline over the past year.

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