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Here's Why You Should Retain Merit Medical Stock in Your Portfolio
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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 second-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 26.6% in the past six months against the 7.8% decline of the industry.The S&P 500 jumped 9% during the same time frame.
The renowned medical device provider has a market capitalization of $5.62 billion. The company projects 12% growth for the next five years and expects to maintain its strong performance going forward. It has delivered an average earnings surprise of 8.39% for the past four quarters.
Image Source: Zacks Investment Research
Let’s delve deeper.
Strong Q2 Results: Merit Medical’s robust second-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 performance in the United States and outside was 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 added with launches and acquisitions. In September, MMSI signed a definitive asset purchase agreement to purchase Cook Medical’s lead management portfolio, including a comprehensive set of solutions to support cardiac intervention patients, ranging from diagnosis to post-procedure care.
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. The company is currently evaluating WRAPSODY, a cell-impermeable endoprosthesis, in dialysis patients for maintaining vessel patency in a clinical study. MMSI announced favorable six-month data from the clinical trial last month, which will support a Premarket Approval application for WRAPSODY.
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.R&D expenses rose 0.7% year over year to $20.3 million.
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 made healthcare products cheaper.
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 third-quarter 2024 revenues is pegged at $334.7 million, suggesting a 6.2% rise from the year-ago quarter’s reported number. The consensus mark for EPS is pegged at 80 cents, implying a 6.7% improvement from the prior-year reported numbers.
Universal Health Service has an estimated long-term growth rate of 19%. UHS’ earnings surpassed estimates in each of the trailing four quarters, with the average being 14.58%.
Universal Health Service has gained 17.9% compared with the industry's 19.8% rise in the past six months.
Quest Diagnostics has an estimated long-term growth rate of 6.2%. DGX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.31%.
Quest Diagnostics shares have gained 14.3% in the past six months compared with the industry’s 8% rise.
Baxter’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 3.74%.
BAX’s shares have declined 17.9% in the past six months against the industry’s 5.8% growth.
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Here's Why You Should Retain Merit Medical Stock in Your Portfolio
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 second-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 26.6% in the past six months against the 7.8% decline of the industry.The S&P 500 jumped 9% during the same time frame.
The renowned medical device provider has a market capitalization of $5.62 billion. The company projects 12% growth for the next five years and expects to maintain its strong performance going forward. It has delivered an average earnings surprise of 8.39% for the past four quarters.
Image Source: Zacks Investment Research
Let’s delve deeper.
Strong Q2 Results: Merit Medical’s robust second-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 performance in the United States and outside was 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 added with launches and acquisitions. In September, MMSI signed a definitive asset purchase agreement to purchase Cook Medical’s lead management portfolio, including a comprehensive set of solutions to support cardiac intervention patients, ranging from diagnosis to post-procedure care.
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. The company is currently evaluating WRAPSODY, a cell-impermeable endoprosthesis, in dialysis patients for maintaining vessel patency in a clinical study. MMSI announced favorable six-month data from the clinical trial last month, which will support a Premarket Approval application for WRAPSODY.
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.R&D expenses rose 0.7% year over year to $20.3 million.
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 made healthcare products cheaper.
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 third-quarter 2024 revenues is pegged at $334.7 million, suggesting a 6.2% rise from the year-ago quarter’s reported number. The consensus mark for EPS is pegged at 80 cents, implying a 6.7% 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 Universal Health Service (UHS - Free Report) , Quest Diagnostics (DGX - Free Report) and Baxter International (BAX - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Universal Health Service has an estimated long-term growth rate of 19%. UHS’ earnings surpassed estimates in each of the trailing four quarters, with the average being 14.58%.
Universal Health Service has gained 17.9% compared with the industry's 19.8% rise in the past six months.
Quest Diagnostics has an estimated long-term growth rate of 6.2%. DGX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.31%.
Quest Diagnostics shares have gained 14.3% in the past six months compared with the industry’s 8% rise.
Baxter’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 3.74%.
BAX’s shares have declined 17.9% in the past six months against the industry’s 5.8% growth.