Baird has increased the price target for Merit Medical Systems , Inc. (NASDAQ: NASDAQ:MMSI) to $107.00, up from the previous target of $96.00, while retaining an Outperform rating on the stock. The decision comes as the firm anticipates the company to surpass its organic growth rate and earnings per share (EPS) for the third quarter, potentially leading to an upward revision of its full-year 2024 guidance.
Merit Medical's stock has seen a recent surge, which analysts believe reflects high expectations for its WRAPSODY endovascular stent graft system. Despite revenue from WRAPSODY not being expected until the second half of 2025, Baird's analysis suggests that the company's current valuation is sustainable. The optimism is based on the potential for growth acceleration due to WRAPSODY and a relatively achievable threshold for meeting second half of 2024 and full-year 2025 revenue and EPS projections.
The analyst's comments highlight confidence in Merit Medical's performance, suggesting that the company is well-positioned to meet or exceed its long-range plan (LRP) targets. The company's focus on delivering a strong quarter is underscored by the belief that it should be able to maintain its valuation in the near term, even as major contributions from its new product are still on the horizon.
Baird's outlook for Merit Medical remains positive, with the expectation that the company's upcoming financial results could serve as a catalyst for further stock appreciation. The firm's analysis indicates that investors have already factored in some of the potential benefits from WRAPSODY, but there remains room for valuation to remain stable due to the anticipated growth trajectory.
The updated price target reflects Baird's assessment of Merit Medical's financial prospects and the anticipated impact of its growth strategies. The Outperform rating suggests that Baird continues to view the stock as a strong investment opportunity relative to its peers in the market.
Merit Medical Systems has announced its agreement to purchase the Lead Management Portfolio from Cook Medical for $210 million, a transaction that is expected to be finalized in the fourth quarter of 2024. The acquisition is projected to add about $4 million to $6 million to Merit's revenue and is anticipated to stimulate greater organic revenue growth. Despite short-term dilution to adjusted margins, the company forecasts a more significant revenue contribution in fiscal year 2025.
In parallel, Merit Medical has been garnering positive attention from analysts. Canaccord Genuity maintained a Buy rating on the company, reaffirming its confidence in Merit's growth and profitability post-acquisition. Needham and Piper Sandler also maintained their Buy and Overweight ratings, respectively, following successful outcomes from Merit Medical's WAVE pivotal study for its WRAPSODY-covered stent.
The WRAPSODY stent demonstrated a target lesion primary patency rate of 89.8% at six months, significantly outperforming the percutaneous transluminal angioplasty. Moreover, Wells Fargo adjusted its outlook on Merit Medical by increasing the price target while maintaining an Equal Weight rating on the stock. This adjustment reflects the potential for the WRAPSODY device to become a leading option in the treatment of arteriovenous fistula patients.
Lastly, Merit Medical reported a total revenue of $338 million in the second quarter of 2024, a 5.6% increase year-over-year. This growth was driven by organic growth and the acquisition of EndoGastric Solutions for $105 million. The company's updated financial guidance for 2024 projects a net revenue increase of 6-7% and non-GAAP diluted EPS growth of 15-17%. These are the latest developments in recent news about Merit Medical Systems.
InvestingPro Insights
Merit Medical Systems' recent performance aligns with Baird's optimistic outlook. According to InvestingPro data, the company's market capitalization stands at $5.56 billion, with a P/E ratio of 46.86, indicating investors' high expectations for future growth. This valuation is supported by strong financial metrics, including a revenue of $1.30 billion over the last twelve months and a robust revenue growth of 8.6% during the same period.
InvestingPro Tips highlight that Merit Medical is trading near its 52-week high and has shown a large price uptick over the last six months, corroborating Baird's positive stance. The company's net income is expected to grow this year, which aligns with the analyst's anticipation of surpassing organic growth rates and EPS expectations.
While the stock trades at a high earnings multiple, Merit Medical operates with a moderate level of debt and has liquid assets exceeding short-term obligations, suggesting financial stability. These factors support the sustainability of the company's valuation, as mentioned in Baird's analysis.
For investors seeking more comprehensive insights, InvestingPro offers 10 additional tips for Merit Medical Systems, providing a deeper understanding of the company's financial position and market performance.
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