Masimo (MASI) provides Q4, FY24 outlook
AInvestWednesday, Jan 10, 2024 10:18 am ET
2min read
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Masimo Corporation (MASI) provided its financial forecasts for 2024, which showcased significant growth potential. The company expects an increase in adjusted earnings per share (EPS) and revenue, indicating positive momentum in the upcoming year. Additionally, Masimo's CEO expressed openness to resolving its ongoing dispute with tech giant Apple, potentially leading to lucrative royalties. 


Masimo forecasts adjusted EPS for 2024 in the range of $3.44 to $3.60, surpassing the market consensus estimate of $3.08. This projection indicates a robust earnings growth trajectory, reflecting the company's focus on innovation, expanding product lines, and strategic initiatives. The company anticipates 2024 revenue between $2.05 billion and $2.17 billion, with the market estimate at $2.09 billion. 


MASI reaffirmed its FY24 Consolidated revenue outlook ($2.04-2.16 billion) and Healthcare revenue ($1.34-1.38 billion). It raised its FY24 Consolidated operating income to $307-322 million from $275-290 million. The company raised its FY24 EPS to a range of $3.44-3.60 from the prior outlook of $3.00-3.15. 


Needham recently downgraded Masimo from a Buy to a Hold rating. The downgrade by Needham and Company is primarily due to concerns over Apple Watch royalties, which have been priced into the MASI shares. The analysts believe the risk-reward ratio for the potential outcomes of the ITC import ban and any associated royalties is not favorable.

Masimo's earnings power has taken a hit, and Needham has lowered its 2024 consensus EPS estimate, believing it may be too high. The separation of Sound United, a subsidiary, is expected to be positive for MASI but could be dilutive to its EPS.

Furthermore, Needham noted mixed reviews from early adopters of MASI's new consumer health products, and the shares are currently trading at a significant premium to peers.

Despite the challenges, MASI has made progress in expanding its product offerings. The company's WiFi-enabled medical watch, the WristOximeter Pulse Oximeter, has received FDA 510(k) clearance for over-the-counter and prescription use.


Masimo's CEO, Joe Kiani, has expressed openness to resolving the ongoing dispute with Apple. However, he mentions that Apple has not yet initiated any settlement discussions. The outcome of this conflict, particularly regarding software issues, may have implications for both Masimo and Apple. 


Masimo's new consumer health products have received mixed reviews from early adopters. While this indicates some room for improvement, it also presents an opportunity for the company to refine and enhance its offerings. 


As Masimo addresses consumer feedback and refines product performance, sentiment towards the company's consumer-focused initiatives may improve, potentially boosting stock performance.


Masimo's 2024 earnings forecast and revenue projections indicate a positive outlook for the company. With the potential for royalties from Apple Watch and an overall increase in revenue, Masimo is well-positioned for continued growth. The ongoing with dispute Apple introduces a degree of uncertainty but highlights the potential for resolution and mutual benefit. As Masimo expands its product offerings and addresses consumer feedback, future performance may improve further. Investors should carefully evaluate the company's financials, market dynamics, and the progress in their collaboration with Apple before making investment decisions related to Masimo (MASI) stock.


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