Masimo Corporation (NASDAQ:MASI) stock plummeted more than 26% in pre-open Tuesday following the company’s preliminary Q2 revenue results.
The company sees Q2 revenues in the range of $453-$457 million, below the consensus estimate of $553.23M, with healthcare revenue of $280-$282M and non-healthcare revenue of $173-$175M.
Due to lower Q2 revenues, the company plans to cut costs in H2/23. More details will be shared with the complete Q2 financial results on August 8, 2023. Updated guidance for fiscal year 2023 will be provided on the same day.
Management plans to reduce the lower end of healthcare revenue guidance to $1.30 billion from $1.45B for the full year.
“We are still evaluating the upper end of revenue guidance for the healthcare business, but it could be materially higher than the lower end of the range, as we are still targeting our original guidance,” added the company.
Additionally, management anticipates reducing annual revenue guidance for the non-healthcare business to $800-$850M from $965-$995M.
Piper Sandler analysts discussed the above-mentioned issues that impacted the Q2 performance.
"Some of these are transitory and not concerning from a long-term perspective (shift in large order timing, hospital census below expectations), whereas others appear potentially more problematic for at least the intermediate term (elevated channel inventory levels tied to discounting, product availability challenges from OEM partners)," they said in a note.
Stifel analysts cut the rating to Hold from Buy and lowered the price target by $85 to $120 per share.
"While it’s clear Masimo’s long-term Healthcare fundamentals are intact, the Consumer outlook seems more uncertain. Over time, we expect the company will successfully adapt to these pressures and work through them helped by a healthy innovation pipeline and substantial contract backlog ($1.3B-$1.4B), but given the many moving pieces, it's difficult for us to feel our usual confidence in Masimo's near-to-medium term outlook," they wrote in a downgrade note.
Additional reporting by Senad Karaahmetovic