Delay In Large Orders, Lower Inpatient Census To Ail Masimo's Q2 Results, Analyst Lowers Estimates

Needham analyst Mike Matson reiterated a Buy rating on Masimo Corporation (NASDAQ: MASI), lowering the price target to $136 from $207.

The company recently reported Q2 2023 preliminary results and revised the 2023 outlook yesterday. MASI expects revenues of $453 million- $457 million range (consensus: $553.23 million). 

The company is expected to report Q2 2023 results on August 8, 2023.

In healthcare, the analyst cautions about delays in large orders, lower inpatient census, elevated inventory levels due to discounting in prior quarters, slower conversions of new customers, and lower capital equipment demand.

Masimo expects healthcare revenue of $280 million-$282 million and non-healthcare revenue of $173 million-$175 million.

And in non-healthcare, management cited a slowdown in high-end audio purchases, the analyst notes.

Given the sluggishness in the preliminary results, the analyst lowered 2023 and 2024 revenue estimates to $2.102 billion from $2.415 billion and $2.215 billion from $2.606 billion, respectively. 

Matson also lowered 2023 and 2024 EPS estimates to $3.07 from $4.70 and $3.68 from $5.44, respectively.

For operating expenses, the analyst lowered 2023 and 2024 estimates to $846 million from $912 million and $870 million from $973 million, respectively, to reflect management's plans for cost reductions and a lack of incentive compensation due to the poor results.

On the positive side, Matson believes that new product launches, market share gains, and new businesses, such as hospital automation, should enable continued strong growth in Masimo's medical unit. 

Price Action: MASI shares are trading lower by 19.1% to $118.93 on the last check Tuesday.