Merit Medical Systems, Inc. MMSI witnessed strong momentum in the year-to-date period. Shares of the company have rallied 24.7% against the industry’s decline of 1.6%. The S&P 500 composite has risen 20.8% in the same period.
With healthy fundamentals and strong growth opportunities, this Zacks Rank #3 (Hold) company appears to be a solid wealth creator for its investors at the moment.
Merit Medical provides various peripheral and cardiac intervention products to cure cardiac conditions specific to interventional cardiology and electrophysiology. The company conducts its business via two operating segments — Cardiovascular (which includes Peripheral Intervention or PI, Cardiac Intervention or CI Custom Procedural Solutions or CPS and Original Equipment Manufacturer or OEM) and Endoscopy.
The Cardiovascular segment offers a broad line of medical devices used to gain and maintain vascular access. These products include Merit Medical’s micropuncture kits, angiographic needles, its family of Prelude Introducer Sheaths, and a wide range of guide wires and safety products. The products of Endoscopy segment, Merit Medical Endotek, are organized into two product portfolios — gastroenterology and pulmonary.
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Catalysts Driving MMSI's Growth
Investors are optimistic about Merit Medical's robust product portfolio and its strong performance in the Cardiovascular business segment. In July, the company enhanced its offerings by entering into an asset purchase agreement with EndoGastric Solutions. This acquisition added the EsophyX Z+ device to Merit Medical's endoscopy portfolio, providing a minimally invasive solution for patients with chronic gastroesophageal reflux disease (GERD). This strategic move is expected to strengthen the company's market position and broaden its therapeutic capabilities.
Merit Medical has experienced significant growth catalysts in recent months. In May, the company launched the basixSKY Inflation Device, which is available as a standalone solution and in kits with Angioplasty Packs, enhancing its product offerings. Additionally, it received FDA 510(k) clearance in May for the Siege Vascular Plug and introduced the Bearing nsPVA Express Prefilled Syringe in the United States and Australia.
For the three months ending June 30, 2024, Cardiovascular accounted for 96.9% of total sales. On the second-quarter earnings call in August, management confirmed total revenue growth of 5.6% on a reported basis and 6.6% at constant exchange rates, driven primarily by the Cardiovascular segment.
The strong performance in the United States and international markets and a notable expansion in operating margin contributed to the company beating the Zacks Consensus Estimate for earnings and revenues. These positive trends are expected to bolster the stock’s price and overall market position.
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
The Zacks Consensus Estimate for Merit Medical’s 2024 and 2025 bottom line projects a 10% and 11.6% year-over-year improvement, respectively, to earnings of $3.31 and $3.69 per share.
In the past 90 days, the Zacks Consensus Estimate for the company's 2024 earnings has remained constant at $3.31 per share.
Revenues for 2024 and 2025 are anticipated to rise 6.7% and 7%, respectively, to $1.34 billion and $1.44 billion on a year-over-year basis.
Merit Medical Systems, Inc. Price
Merit Medical Systems, Inc. Price
Merit Medical Systems, Inc. price | Merit Medical Systems, Inc. Quote
Key Picks
Some better-ranked stocks in the broader medical space are Rockwell Medical RMTI, Tenet HealthCare (THC) and Aveanna Healthcare AVAH. While Rockwell Medical sports a Zacks Rank #1 (Strong Buy), Tenet HealthCare and Aveanna Healthcare carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Rockwell Medical earnings surpassed estimates in each of the trailing four quarters, with the average being 87.9%.
RMTI’s shares have gained 93.1% compared with the industry's 11.7% growth year to date.
Tenet HealthCare has an estimated long-term growth rate of 18.3%. THC's earnings surpassed estimates in each of the trailing four quarters, with the average being 58.5%.
Tenet HealthCare has gained 102.2% compared with the industry's 42.6% growth year to date.
Aveanna Healthcare's earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 47.5%.
AVAH's shares have gained 57.5% year to date compared with the industry’s 16.9% growth.
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