Merit Medical Upgrade to Strong Buy - Analyst Blog

On December 6, 2012, Zacks Investment Research upgraded Merit Medical Systems Inc. ( MMSI ) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Merit Medical has watched most of its earnings estimates move higher on the back of solid third quarter performance and accretive acquisitions. Moreover, this provider of disposable medical devices has delivered positive earnings surprises in 3 of the last 4 quarters with an average beat of 10.6%. The long-term expected earnings growth rate for this stock is 11.6%.

On October 25, 2012, Merit Medical reported third quarter adjusted earnings per share of 20 cents, beating the Zacks Consensus Estimate by 17.6% and the year-ago earnings by 11.1%. Despite a seasonal slowdown, the company witnessed growth across all operating platforms. In addition, Merit Medical reported significant margin expansion on the heels of higher production efficiency and favorable product mix.

Moreover, Merit Medical resorts to inorganic growth to expand its operations. On December 20, 2012, the company closed the acquisition of Thomas Medical Products from GE Healthcare, a division of General Electric ( GE ). This was Merit Medical's second acquisition in two months, the first being the acquisition of Medigroup's assets in November. The buyouts are expected to be immediately accretive to the company's adjusted net earnings.

Merit Medical pursues an aggressive strategy of new product development. It recently gained the clearance from the U.S. Food and Drug Administration (FDA) for its One Snare Endovascular Snare System. Moving forward, the company's three-pronged strategy of innovation, selective acquisitions and domestic expansion is likely to reap positive results in the future as well.

While the Zacks Consensus Estimate for 2012 stood at 76 cents over the last 30 days, the Zacks Consensus Estimate for 2013 rose 3.5% over the same time frame to 89 cents.

Other Stocks to Consider

Other notable medical devices stocks with favorable Zacks Rank are Given Imaging Ltd. ( GIVN ) and Thoratec Corp ( THOR ), each carrying a Zacks Rank #1 (Strong Buy).

GENL ELECTRIC (GE): Free Stock Analysis Report

GIVEN IMAGING (GIVN): Free Stock Analysis Report

MERIT MEDICAL (MMSI): Free Stock Analysis Report

THORATEC CORP (THOR): Free Stock Analysis Report

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Zacks Investment Research

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

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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