On May 8, Zacks Investment Research upgraded
) to a Zacks Rank #2 (Buy) from a Zacks Rank #3 (Hold).
Why the Upgrade?
Masimo has been enjoying rising estimate revisions in the past 30
days with five upward estimate revisions and no downward revision
for 2014. The upward estimate revisions led to a 12.1% rise in the
Zacks Consensus Estimate to $1.30 per share for the year over the
Moreover, Masimo delivered positive earnings surprises in the last
four quarters, with an average beat of 16.5%.
On Apr 30, 2014, Masimo reported first-quarter adjusted earnings of
39 cents per share, which reflected a year-over-year growth of
39.3% and comfortably beat the Zacks Consensus Estimate of 29
cents. Revenues during the first quarter (including royalties) were
up 2.8% to $139.8 million but lagged the Zacks Consensus Estimate
of $144.0 million.
Revenue growth was partially driven by modest improvements in
product revenues, royalties and OEM sales. The company witnessed
strong Masimo rainbow products revenues, which spiked 23% to $12.9
million during the quarter.
Masimo ended the quarter with a strong financial position as cash
and cash equivalents were up 23.1% and capital lease obligations
were down 23.2% from Dec 28, 2013.
For 2014, Masimo expects reported earnings in the range of $1.24 to
$1.33. The current Zacks Consensus Estimate of $1.30 lies within
the guided range.
Masimo expects revenues of $588 to $598 million for 2014, which
includes Product revenues of $560 to $570 million and Royalty
revenues of $28 million. Product revenue guidance includes rainbow
revenues of $60 million. The current Zacks Consensus Estimate of
$591 million lies within the projected range.
Masimo entered 2014 with a 10% increase in its global installed
base. A robust pipeline of multiple new products coupled with
continuing market share gains provides a potential upside for the
company going forward.
Other Stocks to Consider
Some other medical instrument stocks include
RTI Surgical Inc.
Globus Medical, Inc.
). While RTI Surgical sports a Zacks Rank #1 (Strong Buy), Accuray
and Globus Medical carry a Zacks Rank #2 (Buy).
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