By Senad Karaahmetovic
Raymond James analysts raised the rating on Masimo Corp. (NASDAQ:MASI) to Outperform from Market Perform with a $187 per share price target.
The analysts see an attractive stock setup due to several factors: 1) Q4 should be "beatable"; 2) 2023 guidance should trend higher with less FX pressure; 3) a vibrant pipeline adds various new growth drivers and potential upside to out-year estimates; 4) the activist involvement should ensure that shareholder interests are aligned; and 5) the IP dynamic with Apple (NASDAQ:AAPL) provides inexpensive optionality.
"No other company in our coverage offers as many paths to incremental value creation, leaving us to believe that neutral is not the right side to be on. We expect estimates to trend higher and, under this scenario, we believe the stock will outperform," the analysts said in an upgrade note.
They also noted that MASI shares have been a modest Outperform year-to-date, however, this is partially a result of the stock being one of the worst MedTech performers last year.
"While we expect periodic dislocations along the way, we believe the value creation opportunity is significant, which drives the rating change," the analysts concluded.
Masimo shares are moving higher in pre-market Wednesday.