Wednesday, April 10, 2013

New Patents and Coverage Help Propel Masimo 6.6%; Valuation Confirmed

Masimo Corporation got approval on their patent, filed Dec 7, 2007, for the Plethysmograph Variability Processor. This processor triggers blood flow to a given tissue site to calculate different variables and indicators to determine conditions of blood & blood flow, as well as seeing how efficient specific treatments are for these conditions. On another note, Janney Montgomery Scott initiated coverage on Masimo with a BUY rating and a target price of $26.00 a share, further solidifying the UASBIG BUY rating and 12M price target of $26.23.

The accumulation of good news, heightened with a strong market, helped Masimo rally up 1.9% at open to $19.40, opposed to a previous closing price of $19.04. It traded at a high today of $20.35, a gain of 6.9%. The rally eventually cooled down and the stock ended $20.29 a share, representing a daily gain of 6.6%, beating the S&P500 gain of 1.2%. 

Although Masimo is down YTD by 343 basis points, there is much more expected growth as more hospitals begin to implement their products. Within a span of only a couple weeks, three different hospitals have implemented new Masimo systems mainly because of the efficiency and cost effectiveness to both the patient and the provider. The most recent to implement Masimo devices is East Tennessee Children’s Hospital, one of only four hospitals in its state certified as a Comprehensive Regional Pediatric Center. East Tennessee Children’s Hospital has given insight on possibly expanding the Patient SafetyNet into different units of the hospital. With new accelerated acceptance of the Masimo product, our thesis is further affirmed for the long term growth of Masimo.

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