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Three Reasons to 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, courtesy of its strong product portfolio. The optimism, led by solid first-quarter 2024 performance and its continued spending on research and development (R&D), is expected to contribute further. However, headwinds due to higher consolidation in the healthcare industry and forex volatility persist.
This Zacks Rank #3 (Hold) company has gained 9.9% year to date compared with 0.9% growth of the industry.The S&P 500 increased 15.2% during the same time frame.
The renowned medical device provider has a market capitalization of $4.78 billion. The company projects 10.8% growth for the next five years and expects to maintain its strong performance going forward. It has delivered an average earnings surprise of 9.3% for the past four quarters.
Image Source: Zacks Investment Research
Let’s delve deeper.
Strong Q1 Results: Merit Medical’s robust first-quarter 2024 results buoy optimism. The company witnessed a year-over-year uptick in the top and bottom lines. It also saw revenue growth in both its segments and across the majority of the product categories within its Cardiovascular unit. Robust performances in the United States and outside were also registered. The expansion of both margins was also recorded.
Strong Product Portfolio: Merit Medical has continued to gain significant momentum on the back of new products, raising our optimism. In May, the company announced the U.S. commercial release of the basixSKY Inflation Device.
The same month, Merit Medical received the FDA’s 510(k) clearance for its Siege Vascular Plug. The company also announced the launch of its Bearing nsPVA Express Prefilled Syringe in the United States and Australia.
Continued Spend on R&D: Merit Medical’s R&D operations have been central to its historical growth and are believed to be critical to its continued growth. In recent years, the company’s focus on innovation has led to the introduction of several new products, improvements in its existing products, expansion of its product lines, as well as enhancements and new equipment in its R&D facilities. This raises our optimism.
Downsides
Higher Consolidation in the Healthcare Industry: Healthcare costs have risen significantly over the past decade. Thus, 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 has enabled the availability of healthcare products at cheap prices in the market.
Per management, such trends compel Merit Medical’s customers to ask for price concessions on its products, which acts against the ongoing business strategies. This may also exert a solid downward pressure on the prices of Merit Medical’s products and affect its customer base.
Forex Volatility: Merit Medical’s operations outside the United States have increasingly exposed it to market risks related to foreign currency, which could have a negative impact on its margins and financial results. If the rate of exchange between foreign currencies declines against the U.S. dollar, Merit Medical may not be able to increase the prices charged from its customers for products whose prices are denominated in those respective foreign currencies.
Estimate Trend
MMSI is witnessing a positive estimate revision trend for 2024. In the past 60 days, the Zacks Consensus Estimate for its earnings per share (EPS) has moved north by 0.6% to $3.33.
The Zacks Consensus Estimate for the company’s second-quarter 2024 revenues is pegged at $334.9 million, suggesting a 4.7% rise from the year-ago quarter’s reported number. The consensus mark for EPS is pegged at 88 cents, implying an 8.6% improvement from the prior-year reported numbers.
DaVita, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 13.6%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 29.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DaVita’s shares have risen 36.4% compared with the industry’s 9.3% growth year to date.
ResMed, carrying a Zacks Rank of 2 at present, has an estimated earnings growth rate of 13.2% in 2024. Its earnings surpassed estimates in three of the trailing four quarters and missed the same in one, delivering an average surprise of 2.81%.
RMD’s shares have risen 6.9% year to date compared with the industry’s 2.8% growth.
Hologic, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 7.4%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 4.94%.
Hologic’s shares have risen 0.3% year to date compared with the industry’s 4.7% growth.
Image: Bigstock
Three Reasons to Retain Merit Medical (MMSI) Stock for Now
Merit Medical Systems, Inc. (MMSI - Free Report) is well poised for growth in the coming quarters, courtesy of its strong product portfolio. The optimism, led by solid first-quarter 2024 performance and its continued spending on research and development (R&D), is expected to contribute further. However, headwinds due to higher consolidation in the healthcare industry and forex volatility persist.
This Zacks Rank #3 (Hold) company has gained 9.9% year to date compared with 0.9% growth of the industry.The S&P 500 increased 15.2% during the same time frame.
The renowned medical device provider has a market capitalization of $4.78 billion. The company projects 10.8% growth for the next five years and expects to maintain its strong performance going forward. It has delivered an average earnings surprise of 9.3% for the past four quarters.
Image Source: Zacks Investment Research
Let’s delve deeper.
Strong Q1 Results: Merit Medical’s robust first-quarter 2024 results buoy optimism. The company witnessed a year-over-year uptick in the top and bottom lines. It also saw revenue growth in both its segments and across the majority of the product categories within its Cardiovascular unit. Robust performances in the United States and outside were also registered. The expansion of both margins was also recorded.
Strong Product Portfolio: Merit Medical has continued to gain significant momentum on the back of new products, raising our optimism. In May, the company announced the U.S. commercial release of the basixSKY Inflation Device.
The same month, Merit Medical received the FDA’s 510(k) clearance for its Siege Vascular Plug. The company also announced the launch of its Bearing nsPVA Express Prefilled Syringe in the United States and Australia.
Continued Spend on R&D: Merit Medical’s R&D operations have been central to its historical growth and are believed to be critical to its continued growth. In recent years, the company’s focus on innovation has led to the introduction of several new products, improvements in its existing products, expansion of its product lines, as well as enhancements and new equipment in its R&D facilities. This raises our optimism.
Downsides
Higher Consolidation in the Healthcare Industry: Healthcare costs have risen significantly over the past decade. Thus, 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 has enabled the availability of healthcare products at cheap prices in the market.
Per management, such trends compel Merit Medical’s customers to ask for price concessions on its products, which acts against the ongoing business strategies. This may also exert a solid downward pressure on the prices of Merit Medical’s products and affect its customer base.
Forex Volatility: Merit Medical’s operations outside the United States have increasingly exposed it to market risks related to foreign currency, which could have a negative impact on its margins and financial results. If the rate of exchange between foreign currencies declines against the U.S. dollar, Merit Medical may not be able to increase the prices charged from its customers for products whose prices are denominated in those respective foreign currencies.
Estimate Trend
MMSI is witnessing a positive estimate revision trend for 2024. In the past 60 days, the Zacks Consensus Estimate for its earnings per share (EPS) has moved north by 0.6% to $3.33.
The Zacks Consensus Estimate for the company’s second-quarter 2024 revenues is pegged at $334.9 million, suggesting a 4.7% rise from the year-ago quarter’s reported number. The consensus mark for EPS is pegged at 88 cents, implying an 8.6% improvement from the prior-year reported numbers.
Merit Medical Systems, Inc. Price
Merit Medical Systems, Inc. price | Merit Medical Systems, Inc. Quote
Stocks to Consider
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , ResMed (RMD - Free Report) and Hologic (HOLX - Free Report) .
DaVita, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 13.6%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 29.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DaVita’s shares have risen 36.4% compared with the industry’s 9.3% growth year to date.
ResMed, carrying a Zacks Rank of 2 at present, has an estimated earnings growth rate of 13.2% in 2024. Its earnings surpassed estimates in three of the trailing four quarters and missed the same in one, delivering an average surprise of 2.81%.
RMD’s shares have risen 6.9% year to date compared with the industry’s 2.8% growth.
Hologic, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 7.4%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 4.94%.
Hologic’s shares have risen 0.3% year to date compared with the industry’s 4.7% growth.