We maintain our recommendation on
) at Neutral. The company reported second quarter 2012 adjusted
earnings per share of 27 cents, missing both the Zacks Consensus
Estimate and the year-ago earnings of 28 cents per share.
Adjusted earnings exclude an income tax benefit of 3 cents from the
prior year. Reported profit moved up 3.9% year over year to $17.7
million (or 30 cents per share).
Sales for the quarter rose 12% year over year to $122.8 million,
beating the Zacks Consensus Estimate of $120 million. Product
revenues were up 12% to $115.3 million in the reported quarter.
Masimo's global end-user business (85% of product revenue)
increased 16% year over year, but revenues from Original Equipment
Manufacturer (OEM) (15% of product revenue) were down 5%. Sales of
Rainbow products increased 7% year over year to $9.7 million and
included a 48% hike in total hemoglobin (SpHb) revenues.
During the quarter, Masimo shipped about 37,300 Masimo SET pulse
oximetry and Masimo Rainbow SET pulse co-oximetry units, excluding
hand-held sets, flat year-over-year. The company's worldwide
installed base grew 12% year over year to about 1,033,000 units at
the end of the second quarter.
Masimo completed the strategic acquisition of PHASEIN AB of Sweden
in the second quarter. The purchase price was $30 million. PHASEIN
is a provider of sidestream and mainstream capnography offerings.
It had sales of about $10 million.
This acquisition provides the company with another set of
measurable variables using its know-how. It is expected that
earnings per share will be neutral in 2013 and subsequently turn
COVIDIEN PLC (COV): Free Stock Analysis Report
MASIMO CORP (MASI): Free Stock Analysis Report
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Masimo is a market leader in the pulse oximetry monitoring
equipment industry. The company's prospects are encouraging, given
the sizeable global market opportunity, adoption of pulse oximetry
in non-critical areas of the hospital and growing barriers to entry
due to additional non-invasive parameters.
Shipments have been growing at a steady rate fueled by new
contracts. However, the renewal of the royalty agreement with
) provides little or no benefit due to lower rates. Further,
competition is intense and Masimo partly depends upon its OEM
partners for sales. Our Neutral recommendation is supported by a
short-term Zacks #3 Rank (Hold).