STI Medical Profits Portfolio: Buy Masimo

Masimo Corporation (MASI) looks ready to move decidedly higher as it approaches its earnings release on August 5 at 4 P.M.  Like our other biotech portfolio picks, this is a well run company with cash on its balance sheet and a growth agenda.  In fact, Masimo has a nice stash of cash on its balance sheet which it could use to make acquisitions or to plow into research and development.  What that means is that the company’s got time to deliver on its products and get it right.

What we really like are the products, which monitor vital signs when other products can’t.  Masimo pioneered Signal Extraction Technology (SET) a process that lets the pulse oximeter measure the oxygen content of blood without punctures of arteries at states of low blood pressure, where it become a most critical piece of data.  Pulse oximeters are non-invasive, clip-on devices, usually placed on fingers, toes, or ear lobes and are used to measure the amount of oxygen in the blood during anesthesia and during patient stays in the intensive care unit. They are increasingly being used in non-invasive care units as well in order to measure the oxygen concentration of patient’s blood when they are under the influence of opioid painkillers. 

The company also has other product lines aimed at the operating room and intensive care arenas that involve monitoring of gases, such as oxygen and carbon dioxide as patients breathe.  Masimo is starting to make headways into the length of stay and complication rates of patients during surgeries because its equipment is more accurate in measuring key data than its competition. This puts it in a good position, given the global push, but also the ACA related push in the U.S. toward lower costs in hospital stays. Buy Masimo up to $44, with a Stop Loss at $34.

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