Masimo Corp (NASDAQ:MASI)

CAPS Rating: 4 out of 5

A global medical technology company that develops, manufactures and markets non-invasive patient monitoring products that improve patient care.

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Player Avatar TrackZacks (< 20) Submitted: 10/9/2012 4:14:59 PM : Outperform Start Price: $23.69 MASI Score: -1.69

Another Hospital Upgrades with MASI
By: Zacks Equity Research
October 09, 2012

Masimo Corporation (MASI), a leader in non-invasive monitoring technology for patient care, recently revealed that Hamilton Medical Center located in Dalton, Georgia had upgraded to rainbow Pulse CO-Oximetry and Masimo SET pulse oximetry offerings. These offerings provide medical practitioners with continuous and non-intrusive patient monitoring capability.

Hamilton Medical Center is an acute-care facility which offers noteworthy surgical and medical care. The hospital operates 282 beds. For the past couple of years, HealthGrades has selected Hamilton Medical Center as a Distinguished Hospital for Clinical Excellence. This recognition places Hamilton Medical Center in the top 5% of inpatient facilities in the U.S.

Earlier, in the second quarter of 2012, Masimo completed the strategic acquisition of PHASEIN AB of Sweden. The purchase price was $30 million. PHASEIN is a provider of sidestream and mainstream capnography offerings. It had sales of about $10 million. This acquisition provides the company with another set of measurable variables using its know-how. It is expected that earnings per share will be neutral in 2013 and subsequently turn accretive.

Masimo is a market leader in the pulse oximetry monitoring equipment industry. The company’s prospects are encouraging, given the sizeable global market opportunity, adoption of pulse oximetry in non-critical areas of the hospital and growing barriers to entry due to additional non-invasive parameters.

Shipments have been growing at a steady rate fueled by new contracts. However, the renewal of the royalty agreement with Covidien (COV) provides little or no benefit due to lower rates. Further, competition is intense and Masimo partly depends upon its Original Equipment Manufacturers (OEM) partners for sales. We currently have a Neutral recommendation on Masimo. The stock currently retains a Zacks #2 Rank, which translates into a short-term Buy rating.

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