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MASI Stock Gains as US Court Raises Concern About Politan's Ethics
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Masimo (MASI - Free Report) recently announced that a U.S. court has found Politan Capital and its managing partner, Quentin Koffey, guilty of violating a sealing order by releasing information from ongoing court proceedings in a press release dated Sept. 12.
This incident is likely to become a critical factor in the lead-up to Masimo’s 2024 Annual Meeting on Sept. 19, where Politan aims to replace several board members, potentially leading to the ousting of the company’s long-standing CEO and founder, Joe Kiani. The ruling has raised significant issues concerning corporate governance and the ethical conduct of activist investors.
Politan’s press release, which disclosed court proceedings sealed by a previous ruling, was deemed a violation by the U.S. Court for the Central District of California. The court stated that Politan’s disclosure gave it an unfair advantage in its proxy battle with Masimo, as the latter was unable to respond meaningfully due to the constraints of the sealing order.
Although the court ruled in favor of Masimo regarding the breach, it did not issue an injunction because the company failed to demonstrate significant economic damage from Politan’s actions. Furthermore, Politan had made corrective disclosures in response to the litigation.
MASI stock has gained 2% so far following the court ruling on Sept. 14. Year to date, Masimo’s shares have lost 1.9% against the industry’s growth of 9.8%. The S&P 500 Index has gained 18.1% in the said time frame.
Image Source: Zacks Investment Research
Will MASI Gain From the Ruling?
The controversy stems from Politan’s broader agenda, which involves challenging the current leadership at Masimo. The investment firm has been vocal in its criticism of Masimo’s governance, particularly its alleged “egregious CEO benefits” and what Politan describes as “broken governance.”
In June 2024, Politan proposed two new board members, Darlene Solomon, former CTO of Agilent, and William Jellison, former CFO of Stryker, in an attempt to reshape Masimo’s leadership. According to Politan, these changes are necessary to safeguard the company’s future and maximize shareholder value.
However, the court’s contempt ruling has cast doubt on Politan’s ethical standing. Masimo’s management seized the opportunity to question the credibility and integrity of Politan, urging investors to vote against the firm’s nominees. The current board emphasized that Politan and its leadership, including Quentin Koffey, lack the necessary experience and qualifications to guide Masimo, further citing the court’s contempt ruling as evidence of Politan’s questionable conduct.
Importance of MASI’s Board Battle
The upcoming vote on Sept. 19 will determine the future of Masimo’s leadership. It could also result in Joe Kiani being ousted as CEO, a position he has held since the company’s inception. The court ruling adds a layer of complexity to the voting process, as shareholders must now weigh the legal and ethical implications of supporting Politan's candidates. If Politan succeeds, it could lead to a significant shift in Masimo’s strategic direction. A victory for MASI’s current board would maintain the status quo, albeit with renewed questions about governance and accountability. This ruling, therefore, plays a critical role in shaping the company’s future leadership and governance structure.
Currently, Masimosports a Zacks Rank #1 (Strong Buy).
A few other top-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Baxter International Inc. (BAX - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
DVA’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 24.2%. Its shares have risen 56.1% compared with the industry’s 26.3% growth in the past year.
Baxter, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 10%. BAX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.7%.
Baxter has gained 2.9% compared with the industry’s 19.5% growth in the past year.
Boston Scientific, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 12.6%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.
Boston Scientific’s shares have rallied 57.7% compared with the industry’s 19.5% growth in the past year.
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MASI Stock Gains as US Court Raises Concern About Politan's Ethics
Masimo (MASI - Free Report) recently announced that a U.S. court has found Politan Capital and its managing partner, Quentin Koffey, guilty of violating a sealing order by releasing information from ongoing court proceedings in a press release dated Sept. 12.
This incident is likely to become a critical factor in the lead-up to Masimo’s 2024 Annual Meeting on Sept. 19, where Politan aims to replace several board members, potentially leading to the ousting of the company’s long-standing CEO and founder, Joe Kiani. The ruling has raised significant issues concerning corporate governance and the ethical conduct of activist investors.
Politan’s press release, which disclosed court proceedings sealed by a previous ruling, was deemed a violation by the U.S. Court for the Central District of California. The court stated that Politan’s disclosure gave it an unfair advantage in its proxy battle with Masimo, as the latter was unable to respond meaningfully due to the constraints of the sealing order.
Although the court ruled in favor of Masimo regarding the breach, it did not issue an injunction because the company failed to demonstrate significant economic damage from Politan’s actions. Furthermore, Politan had made corrective disclosures in response to the litigation.
MASI stock has gained 2% so far following the court ruling on Sept. 14. Year to date, Masimo’s shares have lost 1.9% against the industry’s growth of 9.8%. The S&P 500 Index has gained 18.1% in the said time frame.
Image Source: Zacks Investment Research
Will MASI Gain From the Ruling?
The controversy stems from Politan’s broader agenda, which involves challenging the current leadership at Masimo. The investment firm has been vocal in its criticism of Masimo’s governance, particularly its alleged “egregious CEO benefits” and what Politan describes as “broken governance.”
In June 2024, Politan proposed two new board members, Darlene Solomon, former CTO of Agilent, and William Jellison, former CFO of Stryker, in an attempt to reshape Masimo’s leadership. According to Politan, these changes are necessary to safeguard the company’s future and maximize shareholder value.
However, the court’s contempt ruling has cast doubt on Politan’s ethical standing. Masimo’s management seized the opportunity to question the credibility and integrity of Politan, urging investors to vote against the firm’s nominees. The current board emphasized that Politan and its leadership, including Quentin Koffey, lack the necessary experience and qualifications to guide Masimo, further citing the court’s contempt ruling as evidence of Politan’s questionable conduct.
Importance of MASI’s Board Battle
The upcoming vote on Sept. 19 will determine the future of Masimo’s leadership. It could also result in Joe Kiani being ousted as CEO, a position he has held since the company’s inception. The court ruling adds a layer of complexity to the voting process, as shareholders must now weigh the legal and ethical implications of supporting Politan's candidates. If Politan succeeds, it could lead to a significant shift in Masimo’s strategic direction. A victory for MASI’s current board would maintain the status quo, albeit with renewed questions about governance and accountability. This ruling, therefore, plays a critical role in shaping the company’s future leadership and governance structure.
Masimo Corporation Price
Masimo Corporation price | Masimo Corporation Quote
MASI’s Zacks Rank & Other Key Picks
Currently, Masimosports a Zacks Rank #1 (Strong Buy).
A few other top-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Baxter International Inc. (BAX - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
DaVita, flaunting a Zacks Rank #1 at present, has an estimated long-term growth rate of 17.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DVA’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 24.2%. Its shares have risen 56.1% compared with the industry’s 26.3% growth in the past year.
Baxter, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 10%. BAX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.7%.
Baxter has gained 2.9% compared with the industry’s 19.5% growth in the past year.
Boston Scientific, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 12.6%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.
Boston Scientific’s shares have rallied 57.7% compared with the industry’s 19.5% growth in the past year.