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Here's Why You Should Retain Masimo (MASI) Stock For Now

Masimo Corporation MASI is well poised for growth in the coming quarters, backed by its slew of favorable study outcomes over the past few months. A robust third-quarter 2021 performance, along with its focus on patient-monitoring, is expected to contribute further. However, concerns regarding overdependence on Masimo SET and reimbursement headwinds persist.

Over the past year, this Zacks Rank #3 (Hold) stock has gained 6.6% compared with 7.2% growth of the industry and 26.5% rise of the S&P 500.

The renowned global provider of non-invasive monitoring systems has a market capitalization of $15.63 billion. The company projects 11.6% growth for 2022 and expects to maintain its strong performance. Masimo has delivered an earnings surprise of 5.38% for the past four quarters, on average.

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Zacks Investment Research

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Let’s delve deeper.

Positive Study Outcomes: We are optimistic about Masimo’s products, which have been subjects of various studies over the past few months. The company, in October, announced the findings of an abstract in which researchers assessed the use of non-invasive, continuous Masimo PVi as part of a goal-directed fluid therapy to guide intraoperative fluid administration during major oncosurgery, in which lung ultrasonography is used to diagnose extravascular lung water.

Masimo, in September, announced the favorable findings of a study that evaluated the company’s EMMA Portable Capnograph. The study concluded that Masimo’s EMMA can be an effective monitoring device for mechanically ventilated pre-term infants (neonates).

Patient-Monitoring in Focus: Masimo, during its third-quarter 2021 earnings call in October, confirmed that it had recorded strong demand from hospitals for its monitors, especially the SET pulse oximeters and rainbow Pulse CO-Oximeters. The company’s recurring revenue stream of single-patient-use sensors has also increased significantly over the past two years on the back of new customer wins, increased utilization across its installed base and the expansion of patient monitoring in hospitals, thus raising our optimism.

Strong Q3 Results: Masimo’s solid second-quarter 2021 results buoy our optimism. The company recorded a strong rebound in sensor sales (on the back of steady expansion of monitoring in hospitals), along with robust order shipments, which is encouraging. Expansion of the company’s installed base is also impressive. A slew of regulatory approvals raise our optimism. Product launches over the past few months is also impressive. Expansion of both margins bodes well for the stock. A raised financial outlook for 2021 augurs well.

Downsides

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

Reimbursement Headwinds: Sales of Masimo’s products depend partly on the reimbursement and coverage policies of governmental and private healthcare payers. Lack of adequate coverage and reimbursement for Masimo’s products, or the procedures in which its products are used, may deter customers from purchasing the same. These trends could lead to pressures to reduce prices for the company’s current and future products, cause a decrease in the size of the market or potentially increase competition, thus causing a material adverse effect on its business.

Estimate Trend

Masimo is witnessing a positive estimate revision trend for 2021. In the past 90 days, the Zacks Consensus Estimate for its earnings per share has moved 0.8% north to $3.88.

The Zacks Consensus Estimate for the company’s fourth-quarter 2021 revenues is pegged at $319.2 million, suggesting an 8.2% improvement from the year-ago quarter’s reported number.

Key Picks

Some better-ranked stocks in the broader medical space are Laboratory Corporation of America Holdings LH or LabCorp, Thermo Fisher Scientific Inc. TMO and AMN Healthcare Services AMN.

LabCorp, flaunting a Zacks Rank #1 (Strong Buy), has an estimated long-term growth rate of 10.6%. LH’s earnings surpassed estimates in the trailing four quarters, the average surprise being 25.73%. You can see the complete list of today’s Zacks #1 Rank stocks here.

LabCorp has gained 48.3% compared with the industry’s 13.8% rise over the past year.

Thermo Fisher has an estimated long-term growth rate of 14%. TMO’s earnings surpassed estimates in the trailing four quarters, the average surprise being 9.02%. It currently carries a Zacks Rank #2 (Buy).

Thermo Fisher has gained 40.8% compared with the industry’s 7.2% rise over the past year.

AMN Healthcare has an estimated long-term growth rate of 16.2%. AMN’s earnings surpassed estimates in the trailing four quarters, the average surprise being 19.51%. It currently sports a Zacks Rank #1.

AMN Healthcare has gained 72.2% against the industry’s 59.9% fall over the past year.


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Thermo Fisher Scientific Inc. (TMO) : Free Stock Analysis Report

Masimo Corporation (MASI) : Free Stock Analysis Report

AMN Healthcare Services Inc (AMN) : Free Stock Analysis Report

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