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Merit Medical Stock Gains 37.9% Year to Date: What's Behind the Rally?
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Merit Medical Systems, Inc. (MMSI - Free Report) witnessed strong momentum in the year-to-date period. Shares of the company have rallied 37.9% compared with the industry’s growth of 3.6%. The S&P 500 composite has risen 24% in the same period.
With healthy fundamentals and strong growth opportunities, this Zacks Rank #2 (Buy) company appears to be a solid wealth creator for its investors at the moment.
Merit Medical specializes in providing products for peripheral and cardiac interventions, targeting conditions in interventional cardiology and electrophysiology. The company operates through two main segments — Cardiovascular and Endoscopy.
The Cardiovascular segment encompasses Peripheral Intervention, Cardiac Intervention, Custom Procedural Solutions and Original Equipment Manufacturer. This segment offers a variety of medical devices designed for vascular access, including micropuncture kits, angiographic needles, Prelude Introducer Sheaths, and an assortment of guide wires and safety products.
Image Source: Zacks Investment Research
The Endoscopy segment, known as Merit Medical Endotek, focuses on two primary product areas — gastroenterology and pulmonary.
Catalysts Driving MMSI's Growth
Investors are optimistic about Merit Medical's strong product portfolio and impressive performance in the Cardiovascular segment. In July, the company expanded its offerings by acquiring assets from EndoGastric Solutions, adding the EsophyX Z+ device to its endoscopy portfolio. This device offers a minimally invasive solution for patients with chronic gastroesophageal reflux disease, a strategic move expected to enhance Merit Medical's market position and therapeutic capabilities.
Merit Medical has seen significant growth catalysts recently. In May, the company launched the basixSKY Inflation Device, available as a standalone product and in kits with Angioplasty Packs, further diversifying its product range. Additionally, it received FDA 510(k) clearance for the Siege Vascular Plug and introduced the Bearing nsPVA Express Prefilled Syringe in the United States and Australia.
For the three months ending Sept. 30, 2024, Cardiovascular accounted for 95% of total sales. On the third-quarter earnings call in October, management confirmed total revenue growth of 7.8% on a reported basis and 7.9% at constant exchange rates, driven primarily by the Cardiovascular segment.
The company saw revenue growth in both its segments and across all the product categories within its Cardiovascular unit. Robust performances in the United States and outside were impressive. The expansion of gross margin bodes well for the stock. Net revenues for 2024 are projected to be between $1.344 billion and $1.352 billion (reflecting an increase of 6.9-7.6% over the comparable reported figures of 2023), up from the prior guidance of $1.339-$1.351 billion provided during the second-quarter earnings call.
In November, MMSI announced the completion of the important acquisition of Cook Medical’s lead management portfolio. This acquisition will add a comprehensive end-to-end product portfolio of medical devices and accessories used in lead management procedures for patients who need a pacemaker or an implantable cardioverter-defibrillator lead removed or replaced. The acquired portfolio will likely strengthen the company’s fast-growing, high-margin electrophysiology and CRM business, as well as enhance its position in the global cardiac intervention market.
Risk Factor
Merit Medical faces strong competition in interventional cardiology, diagnostics and radiology. The company competes against larger, well-established firms with greater financial and technological resources, which can leverage their presence to capture market share through more effective marketing and lower pricing strategies.
This competitive landscape may pose challenges for Merit Medical's growth and profitability, representing a potential risk for investors.
A Look at Estimates
Earnings for 2024 and 2025 are anticipated to rise 11.3% and 10.6%, respectively, to $3.35 and $3.71 on a year-over-year basis.
In the past 30 days, the Zacks Consensus Estimate for the company's 2024 earnings has improved 1.2%.
Revenues for 2024 and 2025 are anticipated to rise 7.2% and 8.6%, respectively, to $1.35 billion and $1.46 billion on a year-over-year basis.
ResMed’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 6.41%. Its shares have risen 37.9% compared with the industry’s 14.2% growth year to date.
Accuray, carrying a Zacks Rank #2 at present, has an estimated earnings growth rate of 106.3% for fiscal 2025. Its earnings missed estimates in three of the trailing four quarters and met in one, delivering an average negative surprise of 141.97%.
ARAY’s shares have lost 35.4% year to date against the industry’s 2.5% growth.
Cardinal Health, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 10.2%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 11.24%.
CAH’s shares have risen 17.4% year to date compared with the industry’s 3.6% growth.
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Merit Medical Stock Gains 37.9% Year to Date: What's Behind the Rally?
Merit Medical Systems, Inc. (MMSI - Free Report) witnessed strong momentum in the year-to-date period. Shares of the company have rallied 37.9% compared with the industry’s growth of 3.6%. The S&P 500 composite has risen 24% in the same period.
With healthy fundamentals and strong growth opportunities, this Zacks Rank #2 (Buy) company appears to be a solid wealth creator for its investors at the moment.
Merit Medical specializes in providing products for peripheral and cardiac interventions, targeting conditions in interventional cardiology and electrophysiology. The company operates through two main segments — Cardiovascular and Endoscopy.
The Cardiovascular segment encompasses Peripheral Intervention, Cardiac Intervention, Custom Procedural Solutions and Original Equipment Manufacturer. This segment offers a variety of medical devices designed for vascular access, including micropuncture kits, angiographic needles, Prelude Introducer Sheaths, and an assortment of guide wires and safety products.
Image Source: Zacks Investment Research
The Endoscopy segment, known as Merit Medical Endotek, focuses on two primary product areas — gastroenterology and pulmonary.
Catalysts Driving MMSI's Growth
Investors are optimistic about Merit Medical's strong product portfolio and impressive performance in the Cardiovascular segment. In July, the company expanded its offerings by acquiring assets from EndoGastric Solutions, adding the EsophyX Z+ device to its endoscopy portfolio. This device offers a minimally invasive solution for patients with chronic gastroesophageal reflux disease, a strategic move expected to enhance Merit Medical's market position and therapeutic capabilities.
Merit Medical has seen significant growth catalysts recently. In May, the company launched the basixSKY Inflation Device, available as a standalone product and in kits with Angioplasty Packs, further diversifying its product range. Additionally, it received FDA 510(k) clearance for the Siege Vascular Plug and introduced the Bearing nsPVA Express Prefilled Syringe in the United States and Australia.
For the three months ending Sept. 30, 2024, Cardiovascular accounted for 95% of total sales. On the third-quarter earnings call in October, management confirmed total revenue growth of 7.8% on a reported basis and 7.9% at constant exchange rates, driven primarily by the Cardiovascular segment.
The company saw revenue growth in both its segments and across all the product categories within its Cardiovascular unit. Robust performances in the United States and outside were impressive. The expansion of gross margin bodes well for the stock. Net revenues for 2024 are projected to be between $1.344 billion and $1.352 billion (reflecting an increase of 6.9-7.6% over the comparable reported figures of 2023), up from the prior guidance of $1.339-$1.351 billion provided during the second-quarter earnings call.
In November, MMSI announced the completion of the important acquisition of Cook Medical’s lead management portfolio. This acquisition will add a comprehensive end-to-end product portfolio of medical devices and accessories used in lead management procedures for patients who need a pacemaker or an implantable cardioverter-defibrillator lead removed or replaced. The acquired portfolio will likely strengthen the company’s fast-growing, high-margin electrophysiology and CRM business, as well as enhance its position in the global cardiac intervention market.
Risk Factor
Merit Medical faces strong competition in interventional cardiology, diagnostics and radiology. The company competes against larger, well-established firms with greater financial and technological resources, which can leverage their presence to capture market share through more effective marketing and lower pricing strategies.
This competitive landscape may pose challenges for Merit Medical's growth and profitability, representing a potential risk for investors.
A Look at Estimates
Earnings for 2024 and 2025 are anticipated to rise 11.3% and 10.6%, respectively, to $3.35 and $3.71 on a year-over-year basis.
In the past 30 days, the Zacks Consensus Estimate for the company's 2024 earnings has improved 1.2%.
Revenues for 2024 and 2025 are anticipated to rise 7.2% and 8.6%, respectively, to $1.35 billion and $1.46 billion on a year-over-year basis.
Merit Medical Systems, Inc. Price
Merit Medical Systems, Inc. price | Merit Medical Systems, Inc. Quote
Key Picks
Some other top-ranked stocks in the broader medical space are ResMed (RMD - Free Report) , Accuray (ARAY - Free Report) and Cardinal Health (CAH - Free Report) .
ResMed, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 14.8%. You can see the complete list of today’s Zacks #1 Rank stocks here.
ResMed’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 6.41%. Its shares have risen 37.9% compared with the industry’s 14.2% growth year to date.
Accuray, carrying a Zacks Rank #2 at present, has an estimated earnings growth rate of 106.3% for fiscal 2025. Its earnings missed estimates in three of the trailing four quarters and met in one, delivering an average negative surprise of 141.97%.
ARAY’s shares have lost 35.4% year to date against the industry’s 2.5% growth.
Cardinal Health, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 10.2%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 11.24%.
CAH’s shares have risen 17.4% year to date compared with the industry’s 3.6% growth.