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Reasons to Retain Merit Medical (MMSI) Stock in Your Portfolio
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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. The momentum achieved in second-quarter 2022, along with solid international exposure, is expected to continue. However, headwinds related to higher consolidation in the healthcare industry, and the lack of direct sales and marketing capabilities persist.
So far this year, this Zacks Rank #3 (Hold) stock has lost 7.4% compared with a 13.3% fall of the industry and an 18.3% decline of the S&P 500.
This renowned medical-devices provider has a market capitalization of $3.27 billion. The company is projected to record 11% growth over the next five years on the back of its continued strong segmental performance. It delivered an earnings surprise of 24.7% in the last four quarters, on average.
Image Source: Zacks Investment Research
Let’s delve deeper.
Strong Product Portfolio: We are upbeat about Merit Medical’s continued gains on the significant momentum of its new products. We are also optimistic about the company’s product pipeline, including radio and electrophysiology products. This month, the company announced the launch of the SCOUT Mini Reflector, which has been designed for use in soft tissues, such as breast and lymph nodes.
The company, in April, launched the ReSolve Thoracostomy Tray, which has all products needed for performing a thoracostomy.
International Exposure: We are upbeat about Merit Medical’s current global operations, including its territories in Europe, the Middle East, Africa, Asia, Oceania, Central and South America, Mexico, and Canada. In the second quarter of 2022, Merit Medical confirmed that its international sales (44.2% of net sales) improved 13.6% organically from the corresponding period of 2021. This included increased sales of 0.9% in APAC operations, 59.5% in Rest of the World operations and 6.2% in EMEA operations, reportedly.
Strong Q2 Results: Merit Medical’s robust second-quarter 2022 results buoy optimism. The company saw solid segmental growth and growth across all product categories within its Cardiovascular unit. Solid product sales and robust performances in both the United States and outside were also witnessed. Strong execution and improving customer demand trends raised the overall top line. Expansion of the adjusted operating margin also bodes well.
Downsides
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 low prices in the market. Per management, such trends compel Merit Medical’s customers to ask for price concessions in its products, which act against its ongoing business strategies. These may also exert a downward pressure on the price of Merit Medical’s products and reduce the customer base.
Lack of Direct Sales and Marketing Capabilities: Merit Medical lacks direct sales and marketing capabilities in many countries. The company wholly depends on third-party distributors for the commercialization of products in countries like China, Japan, Russia and India. Per management, because of inefficiencies in the distributor base, Merit Medical often fails to successfully commercialize its products in these countries.
Estimate Trend
Merit Medical is witnessing a declining estimate revision trend for 2022. In the past 90 days, the Zacks Consensus Estimate for its earnings per share has moved 3 cents down to $2.47.
The Zacks Consensus Estimate for the company’s third-quarter 2022 revenues is pegged at $273 million, suggesting a 2.3% rise from the year-ago quarter’s reported number. The earnings estimate for the same period stands at 53 cents per share, implying growth of 1.9% year over year.
AMN Healthcare, sporting a Zacks Rank #1, reported second-quarter 2022 adjusted EPS of $3.31, which beat the Zacks Consensus Estimate by 11.8%. Revenues of $1.43 billion outpaced the consensus mark by 4.8%.
AMN Healthcare has an estimated long-term growth rate of 3.2%. AMN’s earnings surpassed estimates in the trailing four quarters, the average surprise being 15.7%.
Bio-Rad, carrying a Zacks Rank #2, reported second-quarter 2022 adjusted EPS of $3.38, which beat the Zacks Consensus Estimate by 37.4%. Revenues of $691.1 million outpaced the consensus mark by 3.9%.
Bio-Rad has a historical earnings growth rate of 31.2%. BIO’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 46.8%.
McKesson reported second-quarter 2022 adjusted EPS of $5.83, which surpassed the Zacks Consensus Estimate by 9.8%. Revenues of $67.2 billion outpaced the Zacks Consensus Estimate by 5.1%. It currently carries a Zacks Rank #2.
McKesson has an earnings yield of 6.8% compared with the industry’s 4.4% yield. MCK’s earnings surpassed estimates in three of the trailing four quarters, the average surprise being 13%.
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Reasons to Retain Merit Medical (MMSI) Stock in Your Portfolio
Merit Medical Systems, Inc. (MMSI - Free Report) is well-poised for growth in the coming quarters, backed by its strong product portfolio. The momentum achieved in second-quarter 2022, along with solid international exposure, is expected to continue. However, headwinds related to higher consolidation in the healthcare industry, and the lack of direct sales and marketing capabilities persist.
So far this year, this Zacks Rank #3 (Hold) stock has lost 7.4% compared with a 13.3% fall of the industry and an 18.3% decline of the S&P 500.
This renowned medical-devices provider has a market capitalization of $3.27 billion. The company is projected to record 11% growth over the next five years on the back of its continued strong segmental performance. It delivered an earnings surprise of 24.7% in the last four quarters, on average.
Image Source: Zacks Investment Research
Let’s delve deeper.
Strong Product Portfolio: We are upbeat about Merit Medical’s continued gains on the significant momentum of its new products. We are also optimistic about the company’s product pipeline, including radio and electrophysiology products. This month, the company announced the launch of the SCOUT Mini Reflector, which has been designed for use in soft tissues, such as breast and lymph nodes.
The company, in April, launched the ReSolve Thoracostomy Tray, which has all products needed for performing a thoracostomy.
International Exposure: We are upbeat about Merit Medical’s current global operations, including its territories in Europe, the Middle East, Africa, Asia, Oceania, Central and South America, Mexico, and Canada. In the second quarter of 2022, Merit Medical confirmed that its international sales (44.2% of net sales) improved 13.6% organically from the corresponding period of 2021. This included increased sales of 0.9% in APAC operations, 59.5% in Rest of the World operations and 6.2% in EMEA operations, reportedly.
Strong Q2 Results: Merit Medical’s robust second-quarter 2022 results buoy optimism. The company saw solid segmental growth and growth across all product categories within its Cardiovascular unit. Solid product sales and robust performances in both the United States and outside were also witnessed. Strong execution and improving customer demand trends raised the overall top line. Expansion of the adjusted operating margin also bodes well.
Downsides
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 low prices in the market. Per management, such trends compel Merit Medical’s customers to ask for price concessions in its products, which act against its ongoing business strategies. These may also exert a downward pressure on the price of Merit Medical’s products and reduce the customer base.
Lack of Direct Sales and Marketing Capabilities: Merit Medical lacks direct sales and marketing capabilities in many countries. The company wholly depends on third-party distributors for the commercialization of products in countries like China, Japan, Russia and India. Per management, because of inefficiencies in the distributor base, Merit Medical often fails to successfully commercialize its products in these countries.
Estimate Trend
Merit Medical is witnessing a declining estimate revision trend for 2022. In the past 90 days, the Zacks Consensus Estimate for its earnings per share has moved 3 cents down to $2.47.
The Zacks Consensus Estimate for the company’s third-quarter 2022 revenues is pegged at $273 million, suggesting a 2.3% rise from the year-ago quarter’s reported number. The earnings estimate for the same period stands at 53 cents per share, implying growth of 1.9% year over year.
Merit Medical Systems, Inc. Price
Merit Medical Systems, Inc. price | Merit Medical Systems, Inc. Quote
Stocks to Consider
Some better-ranked stocks from the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Bio-Rad Laboratories, Inc. (BIO - Free Report) and McKesson (MCK - Free Report) . You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
AMN Healthcare, sporting a Zacks Rank #1, reported second-quarter 2022 adjusted EPS of $3.31, which beat the Zacks Consensus Estimate by 11.8%. Revenues of $1.43 billion outpaced the consensus mark by 4.8%.
AMN Healthcare has an estimated long-term growth rate of 3.2%. AMN’s earnings surpassed estimates in the trailing four quarters, the average surprise being 15.7%.
Bio-Rad, carrying a Zacks Rank #2, reported second-quarter 2022 adjusted EPS of $3.38, which beat the Zacks Consensus Estimate by 37.4%. Revenues of $691.1 million outpaced the consensus mark by 3.9%.
Bio-Rad has a historical earnings growth rate of 31.2%. BIO’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 46.8%.
McKesson reported second-quarter 2022 adjusted EPS of $5.83, which surpassed the Zacks Consensus Estimate by 9.8%. Revenues of $67.2 billion outpaced the Zacks Consensus Estimate by 5.1%. It currently carries a Zacks Rank #2.
McKesson has an earnings yield of 6.8% compared with the industry’s 4.4% yield. MCK’s earnings surpassed estimates in three of the trailing four quarters, the average surprise being 13%.