Technology

Merit Medical (MMSI) Down 4.4% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Merit Medical (MMSI). Shares have lost about 4.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Merit Medical due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Merit Medical Q1 Earnings & Revenues Beat Estimates

Merit Medical Systems, Inc. reported first-quarter 2019 adjusted earnings per share (EPS) of 37 cents, outpacing the Zacks Consensus Estimate of 36 cents by 2.8%. The bottom line also improved 19.4% from the year-ago quarter.

This Utah-based provider of peripheral and cardiac intervention products reported worldwide revenues of $238.3 million, up 17.4% from the year-ago quarter. On a comparable, constant-currency basis, the metric increased 10% year over year. Revenues surpassed the Zacks Consensus Estimate of $233 million.

Segmental Analysis

Cardiovascular

The Cardiovascular unit reported first-quarter revenues of $230.5 million, up 17.7% year over year. The upside can be attributed to year-over-year increase of 14.6% in the segment’s Stand-alone devices to $95.4 million. Further, revenues from Catheters surged 27.1% to $43 million. The same at the CRM/EP unit rose 18.3% to $12.4 million.

Meanwhile, revenues from Custom kits and procedure trays unit, under the Cardiovascular segment, dropped 1% to $32.9 million. Inflation devices revenues were down 1.8% year over year to $22 million. Further, embolization devices’ revenues fell 6% to $11.8 million.

Endoscopy Devices

Revenues from the Endoscopy devices totaled $7.9 million, up 9.6% year over year.

Margins

In the quarter under review, gross profit totaled $104.6 million, up 18.8% on a year-over-year basis. Gross margin came in at 43.9% of net revenues, up 50 bps year over year. Adjusted gross margins expanded 170 bps on a year-over-year basis to 49.2% of net revenues.

Merit Medical registered selling, general and administrative expenses of $78.3 million, up 20.6% year over year.

Meanwhile, research and development expenses summed $16 million, up 12% year over year.

Adjusted operating income in the quarter totaled $10.3 million, up 17% from the year-ago quarter. Adjusted operating margin was 4.3% of net revenues, remaining flat year over year.

Financial Update

Cash and cash equivalents came in at $49.5 million, down 26.5% from the 2018-end level.

Total assets came in at $1.69 billion, up 4.3% from the year-end 2018.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

Currently, Merit Medical has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Merit Medical has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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