Masimo (MASI) O3 Regional Oximetry Device Gets FDA Nod

Irvine, CA-based Masimo Corporation (NASDAQ:MASI) recently announced the receipt of FDA 510(k) clearance for O3 regional oximetry device. The approval will allow the company to market the device in the U.S. for pediatric patients weighing more than 5 kg (11 lbs) and less than 40 kg (88 lbs). The company already had the FDA approval to market the product to adult patients in the US.

Stock Performance

Masimo has had an impressive run on the bourse on a year-to-date basis. The company gained roughly 29.09%, which is higher than the Zacks categorized Medical instruments sub industry’s addition of almost 14.93%.

The current level compares favorably with the S&P 500’s return of 9.74% over the same time frame. This, together with a long-term expected earnings growth rate of 15%, instills confidence in investors.

The estimate revision for the stock has been quite favorable. The year has seen five estimates move north over the last two months, compared with no movement in the opposite direction. As a result, the full-year estimates jumped 6.4% to $2.32 over the same time frame. Masimo currently carries a Zacks Rank #3 (Hold).

Coming back to the news, Masimo’s proprietary O3 regional oximetry uses near-infrared spectroscopy (NIRS) to continuously monitor absolute and trended regional tissue oxygen saturation in the cerebral region. Clinical studies have found that when compared with data obtained from blood samples through induced hypoxia, O3 provided absolute root-mean-squared error of 4% and relative root-mean-squared error of 2.1%.

The addition of O3 to Masimo’s approved devices for non-adult segment in the U.S. will enable clinicians to simultaneously access a number of monitoring technologies including rSO2. The other devices are SedLine Brain Function monitoring, Masimo (Signal Extraction Technology) SET SpO2, PVI and SpHb monitoring.

Bottom Line

These latest developmnets will strengthen the company’s product portfolio, helping Masimo to tap in on the abundant opportunities in the U.S. market. Even the global market trends seem to be quite lucrative, as an analysis by the Global Industry Analysts reveals that the Pulse Oximeters market is projected to reach a worth of $2.3 billion by 2020.

Masimo’s other non-invasive products like SET pulse oximeter and rainbow SET technology have been key growth catalysts. New product launches and growing installed base of its existing devices are going to help Masimo gain greater market traction.

Going forward we believe Masimo’s innovative product portfolio is a key catalyst. Moreover, wider adoption of non-invasive patient monitoring technology will help the company gain market traction. The company’s SET pulse oximetry business represents considerable growth opportunities in international markets.

Stocks to Consider

Better-ranked stocks in the broader medical sector include Luminex Corporation (NASDAQ:LMNX) , Edwards Lifesciences Corp. (NYSE:EW) and Accelerate Diagnostics, Inc (NASDAQ:AXDX) . Notably, Luminex sports a Zacks Rank #1 (Strong Buy), while Edwards Lifesciences and Accelerate Diagnostics carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Luminex has an expected long-term adjusted earnings growth of almost 16.3%. The stock added roughly 7.1% over the last three months.

Edwards Lifesciences has a long-term expected earnings growth rate of 15.6%. The stock has a solid one-year return of around 13.6%.

Accelerate Diagnostics projects long-term adjusted earnings growth of almost 30%. The stock returned 30.9% over the last one year.

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