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On Wednesday, BTIG analyst Sean Lavin increased the price target for Masimo Corp. (NASDAQ: NASDAQ:{{16565|MAMASI) shares to $206 from the previous $178, while reiterating a Buy rating on the stock. The adjustment reflects Masimo’s accelerated efforts in margin expansion and its effective cost structure optimization. With a current market capitalization of $9.07 billion and a P/E ratio of 113.6x, InvestingPro analysis suggests the stock is trading above its Fair Value, though it maintains strong fundamentals with a "GOOD" overall financial health score.
Masimo has updated its FY25 Healthcare operating margin guidance to a range of 27.5-28.0%, marking approximately a 400 basis point year-over-year expansion at the midpoint. This significant improvement is attributed to the company’s strategic prioritization of research and development initiatives with the highest return on investment. The company currently maintains a healthy gross profit margin of 50.05% and operates with a moderate level of debt, according to InvestingPro data. For deeper insights into Masimo’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers. Although these forecasts do not account for potential tariff impacts, which could affect operating margins by an estimated 200-250 basis points, BTIG believes Masimo possesses numerous strategies to sustain long-term margin growth.
The company has also experienced a record year in new contracts amounting to $432 million, contributing to its market share gains. As a result, Masimo has reaffirmed its 2025 guidance of $1.50 billion to $1.53 billion in healthcare revenue, reflecting an 8-11% year-over-year increase. This guidance takes into account an additional calendar week and is slightly offset by product line removals and changes to operating lease accounting. These changes are anticipated to become less impactful each year.
In light of these developments, Masimo has raised its adjusted earnings per share (EPS) guidance to $5.10-$5.40, up from the previous $4.90-$5.10 range. This surpasses the consensus estimate of $4.69. Katie Szyman, the new CEO of Masimo, is focusing on reinforcing the company’s leadership in the healthcare market and devising a long-term growth strategy.
Masimo’s healthcare business has shown robust performance, with Consumables and Services revenue increasing by 15% and revenue per driver by 12%. Additionally, the Capital segment is returning to a more normalized state. With these factors and further opportunities to increase operating leverage, Masimo is well on its way to achieving its goal of a 30% adjusted operating margin. Considering the company’s projected profitability and cautious approach to potential tariff impacts, BTIG has adjusted its enterprise value/EBIT multiple up by one point to 25x, leading to the new price target. InvestingPro data shows the stock has delivered an impressive 43% return over the past six months, while maintaining relatively low price volatility. Subscribers can access 10+ additional ProTips and comprehensive valuation metrics to make more informed investment decisions.
In other recent news, Masimo Corporation reported its fourth-quarter 2024 earnings, significantly surpassing expectations. The company achieved an earnings per share (EPS) of $1.80, well above the forecasted $1.42, and reported revenues of $600.7 million, exceeding the anticipated $591.64 million. These results indicate a strong performance, with revenue growing by 9% year-over-year and operating profit increasing by 46%. Additionally, Masimo provided positive guidance for 2025, projecting EPS growth of 22-29% and healthcare revenue growth of 8-10%. The company also announced plans to ship between 240,000 and 260,000 technology boards in the upcoming year. Furthermore, Masimo is in the later stages of potentially divesting its SoundUnited consumer business, which will be classified as held for sale starting in 2025. As part of its strategic focus, Masimo continues to emphasize its core healthcare business and innovation in patient monitoring technologies.
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