Merit Medical Stock Gains 37.9% Year to Date: What's Behind the Rally?

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Merit Medical Systems, Inc. MMSI witnessed strong momentum in the year-to-date period. Shares of the company have rallied 37.9% compared with the industry’s growth of 3.6%. The S&P 500 composite has risen 24% in the same period.

With healthy fundamentals and strong growth opportunities, this Zacks Rank #2 (Buy) company appears to be a solid wealth creator for its investors at the moment.

Merit Medical specializes in providing products for peripheral and cardiac interventions, targeting conditions in interventional cardiology and electrophysiology. The company operates through two main segments — Cardiovascular and Endoscopy.

The Cardiovascular segment encompasses Peripheral Intervention, Cardiac Intervention, Custom Procedural Solutions and Original Equipment Manufacturer. This segment offers a variety of medical devices designed for vascular access, including micropuncture kits, angiographic needles, Prelude Introducer Sheaths, and an assortment of guide wires and safety products.

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The Endoscopy segment, known as Merit Medical Endotek, focuses on two primary product areas — gastroenterology and pulmonary.

Catalysts Driving MMSI's Growth

Investors are optimistic about Merit Medical's strong product portfolio and impressive performance in the Cardiovascular segment. In July, the company expanded its offerings by acquiring assets from EndoGastric Solutions, adding the EsophyX Z+ device to its endoscopy portfolio. This device offers a minimally invasive solution for patients with chronic gastroesophageal reflux disease, a strategic move expected to enhance Merit Medical's market position and therapeutic capabilities.

Merit Medical has seen significant growth catalysts recently. In May, the company launched the basixSKY Inflation Device, available as a standalone product and in kits with Angioplasty Packs, further diversifying its product range. Additionally, it received FDA 510(k) clearance for the Siege Vascular Plug and introduced the Bearing nsPVA Express Prefilled Syringe in the United States and Australia.

For the three months ending Sept. 30, 2024, Cardiovascular accounted for 95% of total sales. On the third-quarter earnings call in October, management confirmed total revenue growth of 7.8% on a reported basis and 7.9% at constant exchange rates, driven primarily by the Cardiovascular segment.

The company saw revenue growth in both its segments and across all the product categories within its Cardiovascular unit. Robust performances in the United States and outside were impressive. The expansion of gross margin bodes well for the stock. Net revenues for 2024 are projected to be between $1.344 billion and $1.352 billion (reflecting an increase of 6.9-7.6% over the comparable reported figures of 2023), up from the prior guidance of $1.339-$1.351 billion provided during the second-quarter earnings call.

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