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Should You Get Rid of Merit Medical Systems (MMSI) Now? - Tale of the Tape

Posted: 8/4/2014 8:39:00 AM
Referenced Stocks: MMSI;ALGN;BRLI;MCK

Similar to wise buying decisions, exiting certain underperformers at the right time helps maximize portfolio returns. Selling off losers can be difficult, but if both the share price and estimates are falling, it could be time to get rid of the security before more losses hit your portfolio.

One such stock that you may want to consider dropping is Merit Medical Systems, Inc. ( MMSI ), which has witnessed a significant price decline in the past four weeks, and it has seen negative earnings estimate revisions for the current quarter and the current year. A Zacks Rank #4 (Sell) further confirms weakness in MMSI.

A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 3 estimates moving down in the past 30 days, compared with just no upward revisions. This trend has caused the consensus estimate to trend lower, going from 75 cents a share a month ago to its current level of 62 cents.

Also, for the current quarter, Merit Medical Systems has seen 2 downward estimate revisions versus no revisions in the opposite direction, dragging the consensus estimate down to 16 cents a share from 22 cents over the past 30 days.   

The stock also has seen some pretty dismal trading lately, as the share price has dropped 18.2% in the past month.

So it may not be a good decision to keep this stock in your portfolio anymore, at least if you don't have a long time horizon to wait.

If you are still interested in the Medical Products sector, you may instead consider some better-ranked stocks including Align Technology Inc. ( ALGN ), Bio-Reference Laboratories Inc. ( BRLI ) and McKesson Corporation ( MCK ). All these stocks hold a Zacks Rank #2 (Buy) and may be better selections at this time.  

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MERIT MEDICAL (MMSI): Free Stock Analysis Report

ALIGN TECH INC (ALGN): Free Stock Analysis Report

BIO REFERNC LAB (BRLI): Free Stock Analysis Report

MCKESSON CORP (MCK): Free Stock Analysis Report

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