Merit Medical Systems, Inc. MMSI is well-poised for growth in the coming quarters, courtesy of its strong product portfolio. The optimism, led by a solid fourth-quarter 2024 performance and its continued spending on research and development (R&D), is expected to contribute further. However, macro headwinds and forex volatility persist.
This Zacks Rank #3 (Hold) company’s shares have risen 9.3% so far this year compared with the industry’s 1.2% growth. The S&P 500 has declined 5.6% during the same time frame.
The renowned medical device provider has a market capitalization of $6.12 billion. The company projects 10.5% growth for the next five years and expects to maintain its strong performance going forward. It delivered an average earnings surprise of 8.14% for the past four quarters.
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Let’s delve deeper.
Strong Q4 Results: Merit Medical’s robust fourth-quarter 2024 results buoy optimism. The company delivered strong top-line growth, driven by increased sales volume, pricing improvements and expansion in key business segments, particularly vascular intervention. International markets also contributed significantly to revenue growth. Profitability improved due to operating efficiency initiatives, disciplined cost management and supply-chain optimizations. Margin expansion was supported by higher sales volume and favorable pricing actions, which helped offset inflationary pressures. Overall, a combination of strategic pricing, operational efficiencies, and market expansion fueled both revenue and earnings growth for the quarter.
Supply-Chain Optimization: In the fourth quarter, MMSI implemented several supply-chain optimization and operational efficiency initiatives to enhance profitability and mitigate cost pressures. The company focused on manufacturing improvements, leveraging automation and process enhancements to drive higher productivity. Strategic supplier partnerships and procurement initiatives helped reduce input costs and improve material availability, ensuring a more resilient supply chain.
Additionally, MMSI optimized inventory management to effectively balance demand and supply, minimizing excess stock while maintaining strong fulfillment rates. The company also worked on logistics enhancements, streamlining distribution channels to reduce lead times and transportation costs. These initiatives collectively contributed to margin expansion and improved overall operational performance during the quarter.
Continued Spending on R&D: Merit Medical is making significant progress in R&D, with a notable 16% year-over-year increase in R&D expenses in the fourth quarter of 2024. This investment reflects the company’s commitment to product innovation, clinical research and pipeline expansion. A key focus has been the WRAPSODY Cell-Impermeable Endoprosthesis (“CIE”), with ongoing efforts for commercializing the device in the United States.
Additionally, MMSI has been leveraging R&D to improve manufacturing efficiencies and optimize product designs, ensuring competitive differentiation in its core markets. While R&D spending has increased, management remains focused on striking a balance between investment and profitability to drive long-term growth.
International Expansion Fuelling Growth: MMSI made significant progress in its international expansion during the fourth quarter, with strong revenue growth from emerging markets and increased adoption of its vascular intervention and surgical solutions globally. The company focused on geographic diversification, leveraging its commercial infrastructure to drive sales in high-growth regions. Strategic investments in local sales teams, distributor partnerships, and regulatory approvals have facilitated market penetration, particularly in Asia and Europe. Additionally, MMSI’s training programs and clinical research initiatives have supported the international adoption of key products, such as the WRAPSODY CIE. Overall, these efforts have strengthened the company’s global presence and positioned it for sustained international growth.
Downsides
Macroeconomic Headwinds: In the fourth quarter, Merit Medical faced several challenges that impacted its operations and financial performance. Macroeconomic headwinds, including inflationary pressures and foreign exchange fluctuations, posed cost challenges, particularly in international markets. Supply-chain constraints, while improving, still created hurdles in material procurement and logistics, affecting product availability and increasing lead times.
Additionally, regulatory complexities and reimbursement challenges in certain regions added to operational difficulties. The company also navigated competitive pressures, requiring continuous investment in R&D and commercial efforts to maintain market share. Despite these challenges, MMSI’s strategic initiatives in pricing, supply-chain optimization, and international expansion helped mitigate risks and drive strong performance.
Forex Volatility: Merit Medical’s operations outside the United States have become increasingly exposed to market risks related to foreign currency, which could negatively impact its margins and financial results. If the rate of exchange between foreign currencies declines against the U.S. dollar, the company may not be able to increase the prices of its products in foreign countries. Fourth-quarter sales reflected an unfavorable impact of 70 basis points due to forex movements.
Merit Medical Systems, Inc. Price
Merit Medical Systems, Inc. Price
Merit Medical Systems, Inc. price | Merit Medical Systems, Inc. Quote
Estimate Trend
MMSI is witnessing a positive estimate revision trend for 2025. In the past 60 days, the Zacks Consensus Estimate for earnings per share (EPS) has moved south 1 cent to $3.66.
The Zacks Consensus Estimate for the company’s first-quarter 2025 revenues is pegged at $352.3 million, suggesting an 8.9% rise from the year-ago reported number. The consensus mark for EPS is pegged at 75 cents, implying a 2.6% decline from the prior-year reported figure.
Stocks to Consider
Some better-ranked stocks in the broader medical space are Masimo MASI, Cencora, Inc. COR and Boston Scientific Corporation BSX.
Masimo, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 20% for 2025. MASI’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 14.41%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Masimo’s shares have gained 0.8% against the industry’s 4.8% decline so far this year.
Cencora, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 12.1%. COR’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 4.9%.
Cencora’s shares have gained 23.8% compared to the industry’s 4% increase year to date.
Boston Scientific, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 13.3%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.3%.
Boston Scientific’s shares have rallied 13% compared with the industry’s 6.1% growth so far this year.
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