Masimo Corporation MASI reported second-quarter 2019 adjusted earnings per share (EPS) of 76 cents, which surpassed the Zacks Consensus Estimate of 73 cents. Earnings improved from the year-ago quarter by 24.6%.
The Zacks Rank #3 (Hold) company’s revenues improved 8.5% year over year to $229.7 million and edged past the Zacks Consensus Estimate of $223 million.
Segmental Analysis
Masimo reports through two segments — Product revenues and Royalty, and Other.
Product Revenues
Product revenues in the second quarter came in at $229.5 million, up 13.6% from the year-ago quarter and 15% at constant currency (cc). Per management, the company shipped 60,400 technology boards and monitors in the quarter.
Royalty and Other Revenues
Revenues at the segment totaled $0.1 million, significantly down from the year-ago quarter’s $9.6 million.
Margin Analysis
In the quarter under review, gross profit totaled $154.3 million, up 8.8% year over year. Gross margin was 67.2%, flat on a year-over-year basis.
Adjusted operating income in the quarter totaled $53 million, up 24.6% from a year ago. Per management, adjusted operating margin improved 200 basis points to 23.1% in the quarter.
Research and development expenses totaled $24.2 million, up 20.4%.
SG&A expenses in the quarter were $78.2 million, up 10.9%.
Masimo Corporation Price, Consensus and EPS Surprise
Masimo Corporation price-consensus-eps-surprise-chart | Masimo Corporation Quote
Guidance Raised
Masimo has raised its 2019 guidance.
The company expects adjusted revenues of $925 million, compared with the earlier-communicated figure of $918 million. Notably, this calls for reported growth of 11.5% and cc growth of 12.2%. The Zacks Consensus Estimate is pegged at $919.4 million, much below the guided range.
Adjusted EPS is now expected at $3.15 compared with the previously stated figure of $3.12. The Zacks Consensus Estimate stands at $3.12, in line with the company’s expectations.
In Conclusion
Masimo exited the second quarter on a strong note. The company continues to gain from its key Product segment, which witnessed solid growth in the quarter. Notably, the company’s non-invasive technology shipments surged in the quarter. In fact, management foresees increased shipments in the quarters ahead. A raised guidance for 2019 buoys optimism as well. Management is optimistic about Masimo’s recent initiative for hospital automation. Recent regulatory approvals and product launches also buoy optimism.
On the flip side, Masimo’s Royalty and Other segment saw significant softness in the quarter. In fact, management expects no meaningful contribution from the unit in 2019. Furthermore, Masimo expects foreign currency headwinds in 2019 to impact its top line. The company faces fierce competition from MedTech bigwigs.
Earnings of Other MedTech Majors at a Glance
Some better-ranked stocks, which posted solid results this earnings season, are Stryker Corporation SYK, Baxter International Inc. BAX and Intuitive Surgical, Inc. ISRG.
Stryker delivered second-quarter 2019 adjusted EPS of $1.98, beating the Zacks Consensus Estimate by 2.6%. Its revenues of $3.65 billion surpassed the Zacks Consensus Estimate by 1.4%. The company currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Baxter delivered second-quarter 2019 adjusted EPS of 89 cents, which surpassed the Zacks Consensus Estimate of 81 cents by 9.9%. Its revenues of $2.84 billion outpaced the Zacks Consensus Estimate of $2.79 billion by 1.9%. The company currently has a Zacks Rank #2.
Intuitive Surgical reported second-quarter 2019 adjusted EPS of $3.25, which beat the Zacks Consensus Estimate of $2.85. Its revenues of $1.1 billion surpassed the Zacks Consensus Estimate of $1.03 billion. The company sports a Zacks Rank #1 at present.
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