Shares of medical technology company Masimo Corp. (NASDAQ: MASI) slipped almost 10% in the extended trading session on Wednesday after it announced preliminary financial results for the first quarter of 2022.
Based out of California, Masimo develops, manufactures, and sells a variety of non-invasive patient monitoring technologies, hospital automation solutions, home monitoring devices, ventilation solutions, and consumer products.
Founded in 1989, the company employs more than 5,300 people across the world. It has licensing agreements with several companies, including Philips, Zoll, Atom, Spacelabs, Mindray North America and GE Medical.
Following Masimo’s announcement, BTIG analyst Marie Thibault offered her views on the results.
Preliminary Q1 Results
For the first quarter of this year, Masimo expects product revenue to range from $285 million to $315 million, compared to the consensus estimate of $330.1 million and the analyst’s expectation of $330.5 million.
The company said lower-than-expected sales were due to freight carrier delays, supply chain issues and the shortage of critical components.
The Chairman and CEO of Masimo, Joe Kiani, said, “In prior quarters, we were able to weather the storm of COVID-related supply chain issues. However, these issues impacted us in the first quarter. We have strong customer demand, and had we been able to ship what was ordered in the first quarter, our revenues would have exceeded expectations.”
Commenting on the results, the analyst said, “This is a major surprise in our view, given MASI’s long history of consistent performance and beats-and-raises. The preannounced range is rather wide, $30 million from high to low end of the range, implying there are still products in transit to customers in the last few days of the quarter that could impact exactly where revenue lands.”
“While disappointing, we acknowledge the difficult, unpredictable nature of today’s supply chain and logistics environment, and expect MASI is reinforcing its supply chain and working to recover,” she added.
Meanwhile, Masimo continues to expect revenues to come in at $1.35 billion for full-year 2022 on the belief that it will “be able to meet order demand during the rest of the year,” Thibault said. The revenue guidance falls below the Street’s estimate of $1.49 billion.
The medical technology company is scheduled to release its first-quarter results on May 3.
Price Target
Overall, the stock has a Moderate Buy consensus rating based on three Buys and two Holds. MASI’s average price target of $227.50 implies 46.4% upside potential. Shares have lost 45.5% year-to-date.
Risk Analysis
According to the TipRanks Risk Factors tool, Masimo’s top two risk categories are Finance & Corporate and Legal & Regulatory, which account for 16 and 15 risks, respectively, of the total 62 risks identified for the stock.
In its recent report, the company has added one key risk factor under the Ability to Sell risk category.
Masimo is concerned that it may not be able to attract new or retain existing customers due to the changes in its product portfolio following its acquisition of Sound United. This could have a negative impact on its revenue and profits.
The Irvine-based company is also worried about the success of its personal consumer strategy and investments. If the strategy does not give the desired results, it could adversely affect Masimo’s financials.
Conclusion
Investors should wait and watch how is the company working to deal with its demand backlog and supply chain issues. Since Masimo has reiterated its full-year 2022 outlook, there is little cause for concern.
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