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Mindray Medical International Limited MR recently announced the receipt of a revised buyout offer of $27 per American Depository share (ADS) or $27 per ordinary share from a group comprising three of its top executives. Following this development, Mindray Medical’s share price declined 2.4% (58 cents) to close at $23.60 on Sep 10.

Notably, the revised price is lower than the earlier proposal of $30 per ADS made in early June. The current offer is almost at a 14% premium to the Sep 10 closing price of $23.60, which is higher than the previous offer of a 9% premium to Jun 3 closing price of $27.47. Hence, we believe that the new offer is quite a profitable one for the investors.

Meanwhile, the disappointing first-half 2015 performance by Mindray Medical has made investors sceptical about the company’s ability to bounce back. We note that the share price had stooped to a 52-week low of $23.51 on Sep 10 and is also down 30.2% from the 52-week high of $33.83. The company is also trading below the 50-day moving average of $25.86.

Year-to-date, Mindray Medical’s share price lost 10.6% as compared to S&P 500, which is down approximately 5.2%. The decline can be attributed to the company’s sluggish performance in the recent times.

In the second quarter of 2015, Mindray Medical reported adjusted earnings of 39 cents per share, which declined 26.4% on a year-over-year basis primarily due to modest revenue growth and contraction in gross and operating margins.

Mindray Medical also provided a disappointing full-year 2015 outlook. Net revenue growth is expected in low-single-digit (down from the previous guidance of mid-single digits) over the 2014 figure. The company now projects adjusted net income decline of 30% (previous guidance was high-teens percentage), primarily owing to lower revenues and interest income.

The outlook reflects intensifying competition from Japanese and European device makers in China, which is the key growth market for the company. The company is also not performing well in the emerging markets.

In such a scenario, we believe that going private is a wise choice for Mindray Medical. The company’s new product launches and robust product pipeline make it an attractive takeover candidate.

Zacks Rank and Key Picks

Mindray Medical has a Zacks Rank #5 (Strong Sell). Better-ranked stocks in the medical sector include Masimo MASI, Thoratec THOR and Cyberonics CYBX. While Masimo and Thoratec sport a Zacks Rank #1 (Strong Buy), Cyberonics carries a Zacks Rank #2 (Buy).