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On Wednesday, BofA Securities began its coverage of Merit Medical Systems , Inc. (NASDAQ: NASDAQ:), assigning a Neutral rating with a price target of $87.00. The target suggests a 10% upside potential from the current standing.
The firm’s stance comes with anticipation of several key events for the medical device company in 2024. Merit Medical is slated to unveil a new long-range plan (LRP) later in February, host an innovation day in March, and potentially receive FDA premarket approval for its WRAPSODY hemodialysis stent graft by the end of the year or early 2025.
The analyst from BofA Securities acknowledged the disposable medical device maker’s upcoming catalysts but also noted that Merit Medical currently trades at a premium compared to its SMID cap medical technology peers. This valuation leaves little room for stock price multiple expansion unless the forthcoming LRP exceeds market expectations or there is increased clarity on the potential market impact of WRAPSODY in the United States.
Merit Medical’s progress and strategic initiatives are being closely monitored by investors. The company’s introduction of its LRP this month and the innovation event in March are particularly significant, as they could provide further insight into the company’s direction and growth potential.
The potential FDA approval for WRAPSODY is also a critical milestone for Merit Medical. The product’s approval timeline, by year-end or early into the following year, could be a pivotal moment for the company’s presence in the hemodialysis market.
InvestingPro Insights
As Merit Medical Systems, Inc. (NASDAQ: MMSI) approaches its long-range plan announcement and innovation day, InvestingPro data and tips provide a deeper understanding of the company’s financial health and market position. The company’s market capitalization stands at a robust $4.51 billion, reflecting investor confidence in its business model and future growth prospects.
Merit Medical’s price-to-earnings (P/E) ratio, at 43.02 based on the last twelve months as of Q3 2023, indicates that the company is trading at a high earnings multiple. This aligns with BofA Securities’ observation that the stock is currently trading at a premium compared to its peers. However, with a PEG ratio of 0.73 in the same period, Merit Medical may be trading at a low P/E ratio relative to its near-term earnings growth, suggesting that the company’s growth trajectory could justify its current valuation.
With a gross profit margin of 46.31% and revenue growth of 7.94% in the last twelve months as of Q3 2023, Merit Medical demonstrates strong profitability and consistent growth. This financial stability is further supported by two InvestingPro Tips: analysts have revised their earnings upwards for the upcoming period, and the company’s cash flows can sufficiently cover interest payments, indicating sound financial management.
For investors seeking a comprehensive analysis of Merit Medical, there are 13 additional InvestingPro Tips available, including insights on the company’s debt levels, valuation multiples, and profitability forecasts. These tips can be accessed through the dedicated InvestingPro page for Merit Medical at https://www.investing.com/pro/MMSI.
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