Masimo: Profits in Patient Monitoring

09/05/2016 7:00 am EST

Focus: HEALTHCARE

Nicholas Vardy

Editor, Bull Market Alert, The Alpha Investor Letter, and The Global Guru

Our latest recommendation is an Irvine, California-based tech company that manufactures non-invasive monitoring devices for use in the medical field, explains Nicholas Vardy, editor of the Bull Market Alert.

For example, Masimo Corporation (MASI) makes oximeters, which doctors place on a patient's finger to monitor oxygen saturation in their blood, thereby making invasive blood tests unnecessary.

The use of non-invasive patient monitoring technology such as the oximeter has increased dramatically in recent years and has become the driving force behind Masimo’s current and future success.

With the stock up 39.75% already in 2016, here’s why I expect Masimo to continue its strong run.

First, Masimo just had two crucial products cleared for distribution by the FDA. The approval of the O3 Regional Oximetry monitor will strengthen the company’s position in a $125 million market.

Also, the Radius-7 monitor (with rainbow measurement capabilities) has received a regulatory go-ahead for global distribution.

Second, although pulse oximetry is still primarily a domestic business, the technology is spreading rapidly across the world. Masimo recently launched the Pronto Pulse CO-Oximeter, its next-generation SpHb Spot Check technology, for markets specifically outside the United States.

The company also recently introduced its next-generation SedLine Brain Function Monitoring technology in London, and the German Heart Center in Berlin recently adopted both this technology and Masimo's O3 Regional Oximetry technology to monitor patients.

Third, Masimo has established a strong track record of under-promising and then over-performing on its earnings.

For Q2, the company reported earnings of 57 cents per share -- a surge of 58% compared to the year-ago quarter -- and beat consensus estimates by eight cents.

Revenues jumped almost 11% year over year to $172.6 million, far ahead of the consensus estimates of $166 million.

For all of 2016, Masimo now projects total revenues of $689 million, a nice bump from previous projections of $677 million. The company also now expects to earn $2.01 per share this year, up from earlier estimates of $1.83.

Finally, Masimo is followed by no fewer than nine separate top-performing small-cap growth investment strategies. A lot of smart money is betting on this company’s continued success. Buy at market, and place your stop at $51.25.

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By Nicholas Vardy, Editor of the Bull Market Alert

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