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Here's Why You Should Retain Merit Medical (MMSI) Stock For Now
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Merit Medical Systems, Inc. (MMSI - Free Report) is well poised for growth in the coming quarters, backed by its strong product portfolio. A solid third-quarter 2021 performance, along with its potential in the Peripheral Intervention arm, is expected to contribute further. However, headwinds due to higher consolidation in the healthcare industry and regulatory requirements persist.
Over the past year, this Zacks Rank #3 (Hold) stock has gained 15.4% compared with 14.1% growth of the industry and 26.1% rise of the S&P 500 composite.
The renowned medical devices provider has a market capitalization of $3.55 billion. The company projects 11% growth for the next five years and expects to maintain its strong performance. It has delivered an earnings surprise of 31.30% for the past four quarters, on average.
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Let’s delve deeper.
Potential in Peripheral Intervention Unit: Merit Medical’s Peripheral Intervention arm buoys our optimism. These products have been contributing enormously to the company’s top-line growth. During third-quarter 2021, the Peripheral Intervention product line reported strong revenue surge year over year, driven by sales of Merit Medical’s radar localization, biopsy, drainage and amyloid products, with growth throughout the product category.
The sale of Merit Medical’s SCOUT radar localization products was robust year over year in the quarter. The company registered strong sales of biopsy, and drainage and amyloid therapy products, as well as cardiac intervention products, during the quarter.
Strong Product Portfolio: We are upbeat about Merit Medical’s continued gains on the back of significant momentum of new products. We are also optimistic about the company’s product pipeline, including radio and electrophysiology products.
The company has several electrophysiology products on track for release and several others in stages of development. The company has also developed a number of new products for testing patients suspected of COVID-19. Merit Medical, in August, announced the commercial launch of the One-Vac Evacuated Drainage Bottle (One-Vac), which can be used to aspirate, remove or sample body fluids.
Strong Q3 Results: Merit Medical’s robust third-quarter 2021 results buoy optimism. The company saw revenue growth in its Cardiovascular segment as well as across the majority of its product categories within its Cardiovascular unit. Strong execution and improving customer demand trends resulting from gradual business recovery pushed up the overall top line, which is encouraging. The company stands to benefit from executing its global growth and profitability plan. Expansion of gross margin also bodes well.
Downsides
Regulatory Requirements: Merit Medical must obtain regulatory approvals and comply with the regulations of foreign countries in which it sells its products. These regulations, including the requirement for approvals or clearances and the time required for regulatory review, vary from country to country.
Higher Consolidation in the Healthcare Industry: Healthcare costs have risen significantly over the past decade. Thus, in order to provide healthcare solutions at a cheaper rate and eradicate competition, large-cap MedTech behemoths have started consolidating with mid-cap and small-cap companies. This enables the availability of healthcare products at cheap prices in the market.
Estimate Trend
Merit Medical is witnessing a positive estimate revision trend for 2021. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 0.9% north to $2.16.
The Zacks Consensus Estimate for the company’s fourth-quarter 2021 revenues is pegged at $269.9 million, suggesting a 4.6% rise from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Laboratory Corporation of America Holdings (LH - Free Report) or LabCorp, Thermo Fisher Scientific Inc. (TMO - Free Report) and AMN Healthcare Services (AMN - Free Report) .
LabCorp, flaunting a Zacks Rank #1 (Strong Buy), has an estimated long-term growth rate of 10.6%. LH’s earnings surpassed estimates in the trailing four quarters, the average surprise being 25.73%. You can see the complete list of today’s Zacks #1 Rank stocks here.
LabCorp has gained 49.2% compared with the industry’s 14.1% rise over the past year.
Thermo Fisher has an estimated long-term growth rate of 14%. TMO’s earnings surpassed estimates in the trailing four quarters, the average surprise being 9.02%. It currently carries a Zacks Rank #2 (Buy).
Thermo Fisher has gained 42.3% compared with the industry’s 9.5% rise over the past year.
AMN Healthcare has an estimated long-term growth rate of 16.2%. AMN’s earnings surpassed estimates in the trailing four quarters, the average surprise being 19.51%. It currently sports a Zacks Rank #1.
AMN Healthcare has gained 75.1% against the industry’s 59.8% fall over the past year.
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Here's Why You Should Retain Merit Medical (MMSI) Stock For Now
Merit Medical Systems, Inc. (MMSI - Free Report) is well poised for growth in the coming quarters, backed by its strong product portfolio. A solid third-quarter 2021 performance, along with its potential in the Peripheral Intervention arm, is expected to contribute further. However, headwinds due to higher consolidation in the healthcare industry and regulatory requirements persist.
Over the past year, this Zacks Rank #3 (Hold) stock has gained 15.4% compared with 14.1% growth of the industry and 26.1% rise of the S&P 500 composite.
The renowned medical devices provider has a market capitalization of $3.55 billion. The company projects 11% growth for the next five years and expects to maintain its strong performance. It has delivered an earnings surprise of 31.30% for the past four quarters, on average.
Let’s delve deeper.
Potential in Peripheral Intervention Unit: Merit Medical’s Peripheral Intervention arm buoys our optimism. These products have been contributing enormously to the company’s top-line growth. During third-quarter 2021, the Peripheral Intervention product line reported strong revenue surge year over year, driven by sales of Merit Medical’s radar localization, biopsy, drainage and amyloid products, with growth throughout the product category.
The sale of Merit Medical’s SCOUT radar localization products was robust year over year in the quarter. The company registered strong sales of biopsy, and drainage and amyloid therapy products, as well as cardiac intervention products, during the quarter.
Strong Product Portfolio: We are upbeat about Merit Medical’s continued gains on the back of significant momentum of new products. We are also optimistic about the company’s product pipeline, including radio and electrophysiology products.
The company has several electrophysiology products on track for release and several others in stages of development. The company has also developed a number of new products for testing patients suspected of COVID-19. Merit Medical, in August, announced the commercial launch of the One-Vac Evacuated Drainage Bottle (One-Vac), which can be used to aspirate, remove or sample body fluids.
Strong Q3 Results: Merit Medical’s robust third-quarter 2021 results buoy optimism. The company saw revenue growth in its Cardiovascular segment as well as across the majority of its product categories within its Cardiovascular unit. Strong execution and improving customer demand trends resulting from gradual business recovery pushed up the overall top line, which is encouraging. The company stands to benefit from executing its global growth and profitability plan. Expansion of gross margin also bodes well.
Downsides
Regulatory Requirements: Merit Medical must obtain regulatory approvals and comply with the regulations of foreign countries in which it sells its products. These regulations, including the requirement for approvals or clearances and the time required for regulatory review, vary from country to country.
Higher Consolidation in the Healthcare Industry: Healthcare costs have risen significantly over the past decade. Thus, in order to provide healthcare solutions at a cheaper rate and eradicate competition, large-cap MedTech behemoths have started consolidating with mid-cap and small-cap companies. This enables the availability of healthcare products at cheap prices in the market.
Estimate Trend
Merit Medical is witnessing a positive estimate revision trend for 2021. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 0.9% north to $2.16.
The Zacks Consensus Estimate for the company’s fourth-quarter 2021 revenues is pegged at $269.9 million, suggesting a 4.6% rise from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Laboratory Corporation of America Holdings (LH - Free Report) or LabCorp, Thermo Fisher Scientific Inc. (TMO - Free Report) and AMN Healthcare Services (AMN - Free Report) .
LabCorp, flaunting a Zacks Rank #1 (Strong Buy), has an estimated long-term growth rate of 10.6%. LH’s earnings surpassed estimates in the trailing four quarters, the average surprise being 25.73%. You can see the complete list of today’s Zacks #1 Rank stocks here.
LabCorp has gained 49.2% compared with the industry’s 14.1% rise over the past year.
Thermo Fisher has an estimated long-term growth rate of 14%. TMO’s earnings surpassed estimates in the trailing four quarters, the average surprise being 9.02%. It currently carries a Zacks Rank #2 (Buy).
Thermo Fisher has gained 42.3% compared with the industry’s 9.5% rise over the past year.
AMN Healthcare has an estimated long-term growth rate of 16.2%. AMN’s earnings surpassed estimates in the trailing four quarters, the average surprise being 19.51%. It currently sports a Zacks Rank #1.
AMN Healthcare has gained 75.1% against the industry’s 59.8% fall over the past year.