Merit Medical Systems (NASDAQ:MMSI) (“Merit” or “Merit Medical”) shares trade near their 52-week high and within sight of an all-time high, and not without good reason. Business held up pretty well in 2020 considering the sharp declines in elective procedures across the world, and the company is leveraged not only to recovering procedure counts in 2021 but new product introductions that were delayed by the pandemic.
Beyond that, the company is also in the early stages of a meaningful margin improvement initiative that includes deprioritizing low-margin products and relocating more production to lower-cost factories. Add in a significant new product (in trials) and the possibility of more R&D allocated to more sophisticated new products, and the growth-plus-margin-enhancement story looks pretty appealing.
Investors need to keep some sense of perspective here – this isn’t Intuitive Surgical (NASDAQ:ISRG) or Stryker (NYSE:SYK) and it never will be – but valued for what it is, I think it’s still a solid med-tech with a self-improvement story. If management can stay on target with its 5% to 7% annual top-line growth, a fair value in the mid-to-high $60s is reasonable today.
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Merit Medical - Recovering Procedure Counts, New Products, And Margin Expansion Support The Stock
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