On Wednesday, Piper Sandler maintained an Overweight rating on shares of Masimo Corp. (NASDAQ:{{16565|MAMASI) and increased the price target to $180 from $165. The adjustment follows Masimo's third-quarter revenue announcement of $505 million, which slightly surpassed consensus expectations.
The company's healthcare segment saw a 12% currency constant growth, compensating for the anticipated consumer sector shortfall. This growth, coupled with improved margins in healthcare, resulted in earnings per share (EPS) that exceeded forecasts and prompted an upward revision of future guidance.
Masimo management has emphasized the stability of the business, noting that there have been "no disruption to our business or departures of critical talent." Furthermore, the company has indicated a more strategic allocation of resources. In an early outlook for 2025, Masimo's management projected a Healthcare Operating Margin (OM%) of 26%, marking a 200 basis point increase year-over-year.
While the firm considers this initial projection conservative, it is seen as an indication of management's commitment to significant profit growth.
The company's focus on its healthcare roots was highlighted as a key factor that is expected to lead to a substantial increase in earnings power over time. Piper Sandler's continued endorsement of Masimo as a top idea is reinforced by these recent updates, with the price target now set at $180.
Masimo's recent performance and forward-looking statements reflect the company's successful navigation through market challenges and its strategic focus on the healthcare sector. With the raised guidance and positive outlook for the operating margin, Masimo appears to be on a trajectory for improved profitability.
The revised price target from Piper Sandler underscores the firm's confidence in Masimo's potential for continued financial success.
InvestingPro Insights
To complement Piper Sandler's optimistic outlook on Masimo Corp. (NASDAQ:MASI), recent data from InvestingPro provides additional context for investors. The company's market capitalization stands at $8.11 billion, reflecting its significant presence in the healthcare technology sector. Masimo's strong performance is evident in its impressive 1-year price total return of 85.8%, substantially outperforming broader market indices.
InvestingPro Tips highlight that Masimo's net income is expected to grow this year, aligning with the company's improved guidance and Piper Sandler's positive assessment. The company's liquid assets exceeding short-term obligations and moderate debt levels suggest a solid financial foundation, which supports its ability to invest in growth initiatives within its healthcare segment.
However, investors should note that Masimo is trading at a high P/E ratio of 100.67, indicating that the market has high growth expectations for the company. This valuation metric underscores the importance of the company delivering on its projected earnings growth to justify its current stock price.
For those seeking a more comprehensive analysis, InvestingPro offers 15 additional tips for Masimo, providing a deeper dive into the company's financial health and market position.
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