Here's Why Investors Should Hold Masimo (MASI) Stock Now
Zacks Investment Research | Dec 09, 2018 08:53PM ET
Masimo Corporation (NASDAQ:MASI) is gaining prominence in the MedTech space, courtesy of its flagship platform — the Signal Extraction Technology (SET) Pulse Oximeter. Moreover, it has a market capitalization of approximately $5.58 billion.
In a year’s time, this Zacks Rank #3 (Hold) stock has gained 23.2% compared with the industry ’s 9% growth.
However, intensifying competition from peers, over-dependence on third-party providers and customer concentration risks are the major headwinds at the moment.
Here we take a quick look at Masimo’s major headwinds and discuss the factors that ensure near-term recovery.
What’s Deterring the Stock?
Masimo faces strong competition from key players of the Medical Devices space namely Waters Corporation (NYSE:WAT), Surmodics, NanoCellect Biomedical and Atlas Genetics. OEM distributors and other big medical devices companies also pose challenges to Masimo.
Furthermore, Masimo looks a little expensive at the moment. A comparative analysis of the company’s forward P/E (F12M basis) multiple reflects a relatively gloomy picture that might be a concern for investors. The ratio is currently pegged at 34.99, a bit stretched when compared with the broader industry’s P/E (F12M basis) multiple of 28.84. The current ratio is also higher than the S&P 500 index’s ratio of 15.73.
Why Should You Retain the Stock?
Masimo’s SET pulse oximetry or SET pulse oximeter solution successfully eliminates the limitations of conventional pulse oximeters. Additionally, the device has been clinically proven to detect critical congenital heart disease (CCHD) in newborns.
Earlier this year, the company announced that it is realizing solid sales growth from its SET pulse oximetry product because of its unique features like Measure-through Motion and Low Perfusion SET pulse oximetry. Also, the advantages of Masimo’s Measure-through Motion and Low Perfusion technology are complemented by the highly differentiated technology embedded in its rainbow products such as SpHb, PVi, and ORi.
For its RD SET sensors, Masimo recently received FDA approval, which is an added positive. Management confirmed that SET pulse oximetry products’ sales growth continued to surpass expectations in third-quarter 2018.
Estimate Revisions
The Zacks Consensus Estimate for fiscal fourth-quarter earnings is pegged at 72 cents, flat year over year. For revenues, the consensus mark stands at $218.9 million, reflecting a 2.8% decrease year over year.
For 2018, the Zacks Consensus Estimate for revenues is pegged at $854.1 million, mirroring an increase of 7%. For adjusted earnings, the same is pinned at $2.92, up 19.2% year over year.
Get The News You Want
Masimo Corporation Price and Consensus
Zacks Investment Research
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.