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Merit Medical (MMSI) Up 0.7% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Merit Medical (MMSI). Shares have added about 0.7% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Merit Medical due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Merit Medical Beats Q4 Earnings and Revenue Estimates

Merit Medical Systems, Incs fourth-quarter 2020 adjusted earnings per share of 54 cents beat the Zacks Consensus Estimate of 43 cents by 25.6%. Moreover, the bottom line rose 35% from the year-ago quarter.

Further, for 2020, adjusted earnings per share came in at $1.65, beating the Zacks Consensus Estimate by 5.8%. The figure also improved 13% year over year.

Revenues in Detail

For the quarter, this Utah-based provider of peripheral and cardiac intervention products reported worldwide revenues of $258 million, in line with year-ago figure. On constant-currency basis, the figure fell 1% year over year. Meanwhile, the top line surpassed the Zacks Consensus Estimate by 3%.

For 2020, revenues summed $963.9 million, down 3.1% year over year both on reported and currency-neutral basis. However, the topline beat the Zacks Consensus Estimate  by 0.8%.

Segmental Details

The Cardiovascular unit reported fourth-quarter revenues of $250.1 million, up 0.3% year over yearon2% increase in Peripheral Intervention revenues to $95.1 million. Moreover, revenues from Custom Procedural Solutions rose 12.1% to $53.8 million. However, revenues from Cardiac Intervention fell 7.4% to $71.9 million. Also, OEM revenues contracted 4.2% to $29.2 million.

Revenues from the Endoscopy devices totaled $7.9 million, down 6.8% year overyear.

Margins

In the quarter under review, gross profit totaled $111.2 million, down 0.4% on a year-over-year basis. Gross margin came in at 43.1% of net revenues, down 19 basis points (bps) year over year.

Adjusted operating profit totaled $16.1 million, up 21.2% year over year.

Adjusted operating margin in the quarter came in at 6.2%, indicating an expansion of 109bps year over year.

Financial Update

The company exited the fourth quarter with cash and cash equivalents of $56.9 million, up from $44.3 million at the end of the year- ago period.

2021 Guidance

Net revenues for 2021 are projected between$990 million and $1.01 billion, indicating an increase of 2.7-4.8%year over year. The Zacks Consensus Estimate for the same is pegged at $1.03 billion.

Adjusted EPS for 2021 is pegged in the range of $1.84-$1.98. The Zacks Consensus Estimate for the same is pegged at $1.86.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, Merit Medical has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Merit Medical has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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