Yahoo Finance 3 Reasons to Add Merit Medical (MMSI) Stock to Your Portfolio
Merit Medical Systems, Inc. MMSI has been gaining from its strong product portfolio. The optimism led by solid first-quarter 2023 performance and potential in its Cardiovascular unit are expected to contribute further. However, headwinds related to higher consolidation in the healthcare industry and stiff competition persist.
Over the past year, this Zacks Rank #2 (Buy) stock has gained 43.1% compared with an 8.1% rise of the industry and a 7.1% growth of the S&P 500.
The renowned medical device provider has a market capitalization of $4.86 billion. The company projects 11% growth for the next five years and expects to maintain its strong performance. It has delivered an earnings surprise of 20.2% for the past four quarters, on average.
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Let’s delve deeper.
Strong Q1 Results: Merit Medical’s robust first-quarter 2023 results buoy optimism. The company witnessed a year-over-year uptick in the top and bottom lines. Solid revenue growth in both its segments and across all the product categories within its Cardiovascular unit was also recorded. Robust performances in the United States and outside were also seen. The company stands to benefit from the execution of its global growth and profitability plan.
Strong Product Portfolio: Merit Medical has continued to gain significant momentum on the back of new products. The company is upbeat about the product pipeline, including radio and electrophysiology products, raising investors’ optimism. It has several electrophysiology products that are either on track for release or in several other stages of development.
In March, Merit Medical announced the expansion of its SwiftNINJA Steerable Microcatheter product line, which belongs to its delivery systems portfolio.
Potential in Cardiovascular Unit: We are optimistic about the unit’s robust potential. During the first quarter of 2023, Merit Medical witnessed a solid uptick in its Cardiovascular unit’s year-over-year revenues on a reported and at constant exchange rate, organic basis. Revenues in the unit’s product categories, Peripheral Intervention, Cardiac Intervention, Custom Procedural Solutions and Original Equipment Manufacturer, were also robust during the first quarter.
Downsides
Higher Consolidation in 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 enables the availability of healthcare products at low prices in the market. Per management, such trends compel Merit Medical’s customers to ask for price concessions on its products, which acts against its ongoing business strategies. This may also exert a solid downward pressure on the prices of Merit Medical’s products and reduce the customer base.
Stiff Competition: Merit Medical operates in highly competitive markets, where it faces competition from many companies with greater resources. The company competes globally in several market areas, including radiology and interventional cardiology. Such resources and market presence may enable the competitors to market competing products more efficiently or at reduced prices to gain market share.
Estimate Trend
Merit Medical is witnessing a positive estimate revision trend for 2023. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 2.5% north to $2.89.
The Zacks Consensus Estimate for the company’s second-quarter 2023 revenues is pegged at $309.9 million, suggesting a 5.1% rise from the year-ago quarter’s reported number.
Other Key Picks
A few other top-ranked stocks in the broader medical space are Hologic, Inc. HOLX, Cardinal Health, Inc. CAH and Boston Scientific Corporation BSX.
Hologic, carrying a Zacks Rank #2 at present, has an estimated growth rate of 5.1% for fiscal 2024. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average being 27.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hologic has gained 4.1% compared with the industry’s 4.7% rise in the past year.
Cardinal Health, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 12.4%. CAH’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 12.3%.
Cardinal Health has gained 50.6% compared with the industry’s 8.1% rise over the past year.
Boston Scientific, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11.5%. BSX’s earnings surpassed estimates in two of the trailing four quarters and missed in the other two, the average surprise being 1.9%.
Boston Scientific has gained 33.7% against the industry’s 29.4% decline over the past year.
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