Masimo Corp MASI recently announced that its SedLine brain function monitor has been selected by Penn Highlands DuBois, a health centre with one of the best hospital safety scores (according to Leapfrog Group). SedLine brain function monitor is part of the company’s Root patient monitoring and display platform.
Masimo’s SedLine brain function monitor enhances neuromonitoring technologies to improve the care of patients under sedation or anesthesia. By utilizing four channels of information, the monitor measures the effects of anesthesia and sedation by keeping a check on both sides of the brain's electrical activity. Thus, it can enable more individualized titration facilitating better patient care.
Penn Highlands DuBois previously used Bispectral Index (BIS) technology from Covidien, now part of Medtronic MDT. Penn Highlands management believes that the SedLine monitor will provide sufficient data about anesthesia, which will subsequently result in better monitoring. Also, the company believes that the Root technology platform will allow it to access more Masimo MOC-9 technology options in the future.
The contract win suggest growing adoption of Masimo’s products. The company expects to gain significant leverage from its Root technology platform. Notably, the company will showcase its Root solutions at the International Anesthesia Research Society's 2015 Annual Meeting and International Science Symposium in Honolulu, Hawaii, from Mar 21-24, attended by the world's top anesthesiologists.
The recent contract win underscores a series of positive developments for the company over the past couple of months. Last month, Masimo got approval for its non-invasive PVI, which is a measure of the dynamic changes in the perfusion index that occur during one or more complete respiratory cycles.
In the International market, the company’s products received rave reviews from Republic of Korea's Ministry of Food and Drug Safety (MFDS) and the Korean Health Technology Assessment (HTA) group.
We believe that Masimo’s expanding product portfolio will improve growth prospects over the long term. However, sluggish capital spending at hospitals, intensifying competition and customer concentration are the major headwinds for the company.
Meanwhile, unfavorable foreign exchange remains a concern for the company’s overall result. Management estimates unfavorable foreign exchange to reduce revenues by $20 million and EPS by 15 cents in 2015.
Zacks Rank
Currently Masimo has a Zacks Rank #4 (Sell). A couple of well-ranked stocks in the medical sector are SurModics SRDX and Abaxis ABAX. While SurModics sports a Zacks Rank #1 (Strong Buy), Abaxis carries a Zacks Rank #2 (Buy).
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