), a leader in non-invasive monitoring technology, recently
announced that the University of North Carolina (UNC) Hospitals
in Chapel Hill have adopted Masimo SET pulse oximetry. This marks
Masimo's second client win in December, after Ogden Regional
Medical Center standardized to Masimo's rainbow pulse CO-Oximetry
and sensor technologies.
Earlier, the UNC Hospitals were using the pulse oximeter of
Masimo's competitor. The switch to Masimo's SET pulse oximetry,
the standard-of-care at leading hospitals worldwide, reflects the
clinical superiority of the company's offerings. Moreover, Masimo
beat its competitor in price.
In a concerted effort to standardize its equipments to Masimo's
offerings, the UNC Hospitals also installed the Masimo Patient
SafetyNet that includes Masimo SET or rainbow SET monitors. Going
forward, the increasing adoption of the company's well-regarded
products across major hospitals will act as a positive catalyst.
Masimo is a market leader in the pulse oximetry monitoring
equipment industry. The company, with a global market size of
more than $1 billion in 2011 for pulse oximetry and price
competitive offerings, should be able to further penetrate the
market. We believe that given the growing barriers to entry in
the non-invasive parameters, higher-than-market growth rate for
SET offerings and robust sales of the rainbow products, the
company has significant revenue drivers.
While the company operates in a price-competitive business
environment, we are concerned that significant price undercutting
might erode profit over time. Our concern is aggravated by the
decline in profit in the third quarter of 2012. Profit decreased
almost 7% year over year to $13.8 million.
We currently have a long-term 'Neutral' recommendation on Masimo,
which carries a short-term Zacks #3 Rank (Hold). Its primary
) also carries a Zacks #3 Rank.
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