Masimo Surges 8.7%: Is This an Indication of Further Gains?

Masimo MASI shares soared 8.7% in the last trading session to close at $121.42. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock’s 8.5% loss over the past four weeks.

The sharp upsurge in Masimo’s shares can be attributed to the surprising news regarding the company’s newly elected Board of Directors. On Sept. 19, per a public statement issued from Politan, activist investor Quentin Koffey, and his Politan Capital Management group’s proposed candidates, both won election to the two available Board seats of Masimo. This guarantees that the new independent directors now have a control of the Board. On Sept. 20, the share price of MASI surged as the investors continued to celebrate the news in a positive view that the new Board is likely to be more conscious of and responsive to the investors.

This medical technology company is expected to post quarterly earnings of $0.84 per share in its upcoming report, which represents a year-over-year change of +33.3%. Revenues are expected to be $501.93 million, up 4.8% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Masimo, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock’s price usually doesn’t keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on MASI going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #2 (Buy).

Masimo is part of the Zacks Medical – Instruments industry. CVRx CVRX, another stock in the same industry, closed the last trading session 1.5% lower at $9.11. CVRX has returned 10.9% in the past month.

For CVRx, the consensus EPS estimate for the upcoming report has remained unchanged over the past month at -$0.45. This represents a change of -4.7% from what the company reported a year ago. CVRx currently has a Zacks Rank of #3 (Hold).

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