Masimo (MASI) To Report Q2 Earnings: What's In The Offing?

Masimo Corporation (NASDAQ:MASI) is scheduled to report second-quarter 2019 results on Jul 31, after the closing bell. A slew of developments and product launches are expected to reflect on the quarterly results. However, dismal performance by the Royalty and Other unit and stiff competition raise concern.

Masimo delivered an earnings surprise of 5.3% in the last reported quarter, the average for the trailing four quarters being a positive 6.6%.

Which Way Are Estimates Headed?

For the second quarter, the Zacks Consensus Estimate for Masimo’s earnings per share is pegged at 73 cents. The same for revenues stands at $223 million, calling for a year-over-year improvement of 5.4%.

Masimo Corporation Price and EPS Surprise

Masimo Corporation price-eps-surprise | Masimo Corporation Quote

Let’s see how things are shaping up prior to the second-quarter release.

Factors to Influence Q2

Masimo’s flagship platforms SET Pulse Oximetry, Radical-7, NomoLine Capnography and Patient SafetyNet contribute significantly to the company’s top line and are also expected to have driven results for the to-be-reported quarter. Additionally, these platforms have seen significant developments in recent times.

For instance, NuVision Management Healthcare Consulting Company recently deployed a variety of Masimo technologies at its four pediatric care facilities in New Jersey and Florida. Masimo’s SET, Root with Radical-7, NomoLine Capnography and Patient SafetyNet are a few of the technologies deployed.

Additionally, Masimo’s Root Patient Monitoring and Connectivity Hub has received the CE Mark, marking the first commercial availability of Masimo Open Connect.

Earlier this year, Masimo received a 510(k) clearance from the FDA for its Rad-67 Pulse CO-Oximeter. The device includes Spot-check Next Generation SpHb monitoring technology and the rainbow DCI-mini Reusable Sensor. (Read More: Masimo Gets FDA Clearance for Rad-67 Monitoring Device)

That’s not all. Masimo has launched several products in recent times.

Earlier this year, Masimo launched products like UniView. In addition, the company recently introduced Root with Vital Signs Check, a product that enables hospitals to automate data collection. This reflects steady progress in advancing Masimo’s hospital automation solutions for customers.

Also, in February, Masimo announced the launch of Doctella, a home-based patient engagement and remote care automation platform.

Such positive trends are expected to reflect on results for the to-be-reported quarter.

However, Masimo’s Royalty and Other unit has been facing softness for a couple of quarters now. In fact, management does not expect any significant contribution from the unit in the quarter to be reported. Meanwhile, Masimo faces strong competition from larger players such as Covidien in the pulse oximetry market.

What Does Our Model Say?

Our proven model clearly indicates that a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to deliver a positive earnings surprise. However, that is not the case here.

Earnings ESP: Masimo has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Masimo carries a Zacks Rank #3. Despite a favorable rank, an Earnings ESP of 0.00% reduces its chances of a beat this season.

Meanwhile, we caution against stocks with a Zacks Rank #4 (Sell) or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revision.

Stocks Worth a Look

Here are a few medical stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.

Adamis Pharmaceuticals Corporation (NASDAQ:ADMP) has an Earnings ESP of +11.76% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here

DENTSPLY SIRONA (NASDAQ:XRAY) has an Earnings ESP of +6.95% and a Zacks Rank #1.

Allena Pharmaceuticals, Inc. (NASDAQ:ALNA) has an Earnings ESP of +7.55% and a Zacks Rank #1.

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