Technology

Why Is Merit Medical (MMSI) Up 7.1% Since Last Earnings Report?

A month has gone by since the last earnings report for Merit Medical (MMSI). Shares have added about 7.1% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Merit Medical due for a pullback? 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 catalysts.

Merit Medical Beats Q2 Earnings and Revenue Estimates

Merit Medical Systems, Inc. reported second-quarter 2020 adjusted earnings per share of 31 cents, which beat the Zacks Consensus Estimate of 3 cents. Moreover, the bottom line fell 26.2% from the year-ago quarter.

On a GAAP basis, loss per share came in at 34 cents against EPS of 12 cents in the year-ago quarter.

Revenues in Details

This Utah-based provider of peripheral and cardiac intervention products reported worldwide revenues of $218.4 million, down 14.5% from the year-ago quarter. On a comparable constant-currency basis, the figure fell 13.6% year over year. However, the top line surpassed the Zacks Consensus Estimate of $193.23 million by 13%.

The Cardiovascular unit reported second-quarter revenues of $212.2 million, down 14% year over year due to a year-over-year decrease of 18.2% in Peripheral Intervention revenues to $72.6 million. Further, revenues from Cardiac Intervention fell 17.1% to $66 million. Moreover, revenues from Custom Procedural Solutions fell 4% to $45.3 million. Also, OEM revenues fell 8.9% to $28.2 million.

Revenues from the Endoscopy devices totaled $6.2 million, down 30.1% year over year.

Margins

In the quarter under review, gross profit totaled $84.2 million, down 24.8% on a year-over-year basis. Gross margin came in at 38.6% of net revenues, down 525 basis points (bps) year over year.

Adjusted operating profit totaled $3.4 million, down 96.4% year over year.

Adjusted operating margin in the quarter came in at 1.6%, indicating a contraction of 3586 bps year over year.

Financial Update

The company exited the second quarter with cash and cash equivalents of $49.7 million, down from $50.1 million at the end of the first quarter.

2020 Guidance

Due to the continued uncertainty and rapid change in the global environment on account of the coronavirus pandemic, management has been unable to provide any financial guidance for the remainder of 2020.

How Have Estimates Been Moving Since Then?

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

VGM Scores

Currently, Merit Medical has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, 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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