Why Is Masimo (MASI) Up 5.3% Since Last Earnings Report?

It has been about a month since the last earnings report for Masimo (MASI). Shares have added about 5.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Masimo due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Masimo Q1 Earnings Beat Estimates, Margins Expand

Masimo Corporation  reported first-quarter 2020 adjusted earnings per share  of 97 cents, which surpassed the Zacks Consensus Estimate of 88 cents. Earnings improved 22.8% from the year-ago quarter.

The company’s total revenues (including Royalty) improved 16.4% year over year to $269.6 million.

Segmental Analysis

Product Revenues

Product revenues in the first quarter totaled $269.6 million, up 16.9% from the year-ago quarter and 17.5% at constant currency (cc).
Per management, shipments of non-invasive technology boards and monitors increased 13.2% to 72,100 in the quarter.

Margin Analysis

In the quarter under review, gross profit totaled $185.6 million, up 22.4% year over year. Gross margin was 68.8%, up 339 basis points (bps).
Adjusted operating income in the quarter totaled $68.5 million, up 22.3% from a year ago. Adjusted operating margin expanded 123 bps to 25.4% in the quarter.

Research and development expenses totaled $27.2 million, up 27.2%.
SG&A expenses in the quarter grossed $89.9 million, up 21.1%.

2020 Guidance

Given the uncertainties surrounding the COVID-19 pandemic and its potential negative as well as positive impacts on its business, the company is not  offering guidance for 2020.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -7.19% due to these changes.

VGM Scores

At this time, Masimo has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Masimo has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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