The diagnosis for Masimo (MASI) doesn’t look good as the medical device company faces significant downward pressure on its earnings estimates, compelling a downgrade to a Zacks Rank #5 (Strong Sell). The prognosis for the stock price indicates near-term vulnerability due to various headwinds.
Specializing in non-invasive patient monitoring solutions, Masimo has made its mark with innovative Signal Extraction Technology (SET) and devices such as pulse oximeters and continuous monitoring systems. These products are vital in healthcare settings, enhancing patient safety by providing real-time and accurate data on crucial parameters.
Although MASI stock has been a strong performer over the last decade, boasting a Compound Annual Growth Rate (CAGR) of 14.6%, there are numerous challenges on the horizon. Besides falling earnings estimates, the company anticipates almost stagnant sales growth over the next year, coupled with a relatively high valuation.
Cratering Earnings Estimates
Analysts have notably revised down earnings estimates, reflecting a severe decline in projections, especially for FY25. Current quarterly earnings estimates have plummeted by -40% in the last two months, with a projected YoY fall of -38% to $0.82 per share. Additionally, FY23 earnings estimates have been downgraded by -14.8%, with an expected YoY decrease of -36% to $2.94.
Premium Valuation
Despite these bearish catalysts, Masimo still maintains a relatively high earnings multiple, trading at a one-year forward earnings multiple of 40.3x. This valuation surpasses the industry average, market average, and its 10-year median of 33.8x.
Bottom Line
The current outlook is far from promising for Masimo, exacerbated by its rich valuation. Nevertheless, with patient monitoring gaining heightened importance and positive studies emerging for its products, a potentially promising future still flickers on the horizon for the company. However, until these near-term risks dissolve, investors should exercise caution and explore opportunities elsewhere in the market.
Zacks Naming Top 10 Stocks for 2024
Want to be tipped off early to our 10 top picks for the entirety of 2024?
History suggests their performance could be sensational.
From 2012 (when our Director of Research, Sheraz Mian assumed responsibility for the portfolio) through November, 2023, the Zacks Top 10 Stocks gained +974.1%, nearly TRIPLING the S&P 500’s +340.1%. Now Sheraz is combing through 4,400 companies to handpick the best 10 tickers to buy and hold in 2024. Don’t miss your chance to get in on these stocks when they’re released on January 2.
Be First to New Top 10 Stocks >>
MSA Safety Incorporporated (MSA) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
