Merit Medical Upgrade to Strong Buy - Analyst Blog
January 03 2013 - 10:10AM
Zacks
On December 6, 2012, Zacks
Investment Research upgraded Merit Medical Systems
Inc. (MMSI) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Merit Medical has watched most of its earnings estimates move
higher on the back of solid third quarter performance and accretive
acquisitions. Moreover, this provider of disposable medical devices
has delivered positive earnings surprises in 3 of the last 4
quarters with an average beat of 10.6%. The long-term expected
earnings growth rate for this stock is 11.6%.
On October 25, 2012, Merit Medical reported third quarter adjusted
earnings per share of 20 cents, beating the Zacks Consensus
Estimate by 17.6% and the year-ago earnings by 11.1%. Despite a
seasonal slowdown, the company witnessed growth across all
operating platforms. In addition, Merit Medical reported
significant margin expansion on the heels of higher production
efficiency and favorable product mix.
Moreover, Merit Medical resorts to inorganic growth to expand its
operations. On December 20, 2012, the company closed the
acquisition of Thomas Medical Products from GE Healthcare, a
division of General Electric (GE). This was Merit
Medical’s second acquisition in two months, the first being the
acquisition of Medigroup’s assets in November. The buyouts are
expected to be immediately accretive to the company’s adjusted net
earnings.
Merit Medical pursues an aggressive strategy of new product
development. It recently gained the clearance from the U.S. Food
and Drug Administration (FDA) for its One Snare Endovascular Snare
System. Moving forward, the company’s three-pronged strategy of
innovation, selective acquisitions and domestic expansion is likely
to reap positive results in the future as well.
While the Zacks Consensus Estimate for 2012 stood at 76 cents over
the last 30 days, the Zacks Consensus Estimate for 2013 rose 3.5%
over the same time frame to 89 cents.
Other Stocks to Consider
Other notable medical devices stocks with favorable Zacks Rank are
Given Imaging Ltd. (GIVN) and Thoratec
Corp (THOR), each carrying a Zacks Rank #1 (Strong
Buy).
GENL ELECTRIC (GE): Free Stock Analysis Report
GIVEN IMAGING (GIVN): Free Stock Analysis Report
MERIT MEDICAL (MMSI): Free Stock Analysis Report
THORATEC CORP (THOR): Free Stock Analysis Report
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