On Friday, Jefferies analyst Matthew Taylor increased the price target for Masimo Corp. (NASDAQ:{{16565|MAMASI) shares to $165 from the previous $145, while maintaining a Hold rating on the stock. The adjustment follows Masimo's report of preliminary fourth-quarter sales of $601 million, marking a 9% growth on a constant currency basis, which surpassed the consensus estimate of $591 million.
This performance was attributed to stronger-than-expected non-healthcare sales. According to InvestingPro data, the company has demonstrated impressive momentum with a 56% price return over the past six months, though it's currently trading at a relatively high P/E ratio of 114.
Masimo also presented its fiscal year 2025 guidance, which excludes contributions from its Sound business. The company has modestly increased its sales growth forecast from the 7-10% range to 8-11% on a constant currency basis. Additionally, the operating margin is expected to improve slightly from around 26% to approximately 26.5%, and earnings per share (EPS) are projected to be between $4.90 and $5.10.
These projections reflect management's success in achieving over 200 basis points in operating margin expansion and the separation of the Sound business. The company maintains a healthy financial position with a current ratio of 2.01 and operates with a moderate debt level, as highlighted in InvestingPro's analysis, which includes 12 additional key insights about the company's financial health.
Taylor commented on the company's performance, acknowledging the management's progress and the resulting financial improvements. Despite the positive developments and the raised financial projections, the analyst's stance remains unchanged due to valuation considerations.
The new price target and maintained rating take into account the company's financial outlook and the strategic steps Masimo's management has taken to optimize its operations and focus on its core business. The analyst's comments indicate a recognition of Masimo's achievements while also considering the stock's current valuation in the decision to maintain a Hold rating.
In other recent news, Masimo Corp. has reported promising preliminary financial results for the fourth quarter of 2024. The company's expected revenue of approximately $601 million surpasses consensus estimates of $592 million, marking a year-over-year growth of about 9%. Needham, an investment firm, maintained a Hold rating on the company following these announcements.
In the same period, Masimo's healthcare revenue is projected to be around $368 million, showing an 8% increase, while non-healthcare revenue is expected to reach $232 million, marking an 11% growth. For the entire year of 2024, the company anticipates total revenue to be approximately $2.094 billion, indicating a 2% growth from the previous year.
The company also provided guidance for its non-GAAP earnings per share (EPS) for 2024, expecting it to exceed $4.10. Looking ahead to 2025, Masimo forecasts healthcare revenue to be between $1.50 billion and $1.53 billion, an 8-11% increase, surpassing the consensus of $1.442 billion.
Additionally, Raymond (NS:RYMD) James maintained its Outperform rating on Masimo's shares and increased the price target, highlighting the company's margin expansion opportunities. Piper Sandler analysts also expressed confidence in Masimo's ability to surpass Q4 projections and 2025 consensus estimates.
Lastly, Masimo announced a strategic shift towards its core healthcare business, resulting in the termination of Tao Levy, the company's Executive Vice President of Business Development, and the appointment of Michelle Brennan as interim Chief Executive Officer for a six-month term.
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