Medical-device company Masimo recently made a disappointing sales forecast that has analysts buzzing. However, it’s not the healthcare segment that is causing worry.
According to FactSet, Masimo expects its second-quarter revenue to range between $453 million and $457 million. This includes both the healthcare and non-healthcare segments. The projection falls significantly short of Wall Street’s forecast of $553 million.
Unsurprisingly, this news had a negative impact on Masimo’s stock. On Tuesday, shares of Masimo (ticker: MASI) dropped 22% to $114.87. This is the largest percentage decrease the company has experienced since February 2022, as reported by Dow Jones Market Data.
When analyzing the healthcare segment, the management of Masimo pointed to several factors contributing to the underwhelming forecast. These include delays in large orders and heightened inventory levels resulting from discounts in previous quarters. Similarly, within the non-healthcare segment, there has been a decline in demand for high-end audio products.
In response to this disappointing revenue, Masimo has affirmed its commitment to reducing costs in the coming months. The company is determined to take action and make necessary adjustments during the second half of the year.
Furthermore, Masimo now anticipates that its full-year revenue guidance for the healthcare sector will range between $1.30 billion and $1.45 billion. This reflects a downward revision of the initially projected lower end of the range.
Despite these challenges, Masimo remains focused on navigating the current market conditions and making strategic decisions to optimize its performance.
Company Expects Revenue Outlook Cut for Non-Healthcare Business
In a recent announcement, Company Name revealed its intention to reduce its annual revenue outlook for the non-healthcare business. The revised range is expected to be between $800 million and $850 million, down from the previous estimate of $965 million to $995 million.
Analysts’ Assessment
Analysts at Stifel have downgraded the company’s stock from Buy to Hold. Additionally, they have lowered their price target from $205 to $120 in a report released on Monday. According to their analysis, while the long-term healthcare fundamentals remain strong, the consumer outlook appears uncertain due to heightened competition for lower prices.
On the other hand, Needham analysts have offered a slightly different perspective on the preliminary second-quarter numbers. They have maintained a Buy rating for the stock but have reduced their price target from $207 to $136. In their Tuesday report, they have also adjusted revenue, earnings, and operating expense estimates for 2023 and 2024. Despite acknowledging some transitory healthcare challenges, they argue that the non-healthcare segment faces more significant issues. As a solution, they suggest that separating Sound United, a consumer-technology company acquired by Company Name last year, could bring added value.
Upcoming Financial Results
Investors and stakeholders can anticipate the release of Company Name‘s second-quarter financial results on August 8 after the market closes.
