Merit Medical Systems , Inc. (NASDAQ: NASDAQ:MMSI) maintained a positive outlook from Canaccord Genuity with a reiterated Buy rating and a steady price target of $125.00.
The endorsement follows Merit Medical's announcement of its agreement to acquire the Lead Management Portfolio from Cook Medical for a sum of $210 million.
The transaction is anticipated to be finalized in the fourth quarter of 2024, pending regulatory approvals, including the Hart-Scott-Rodino (HSR) Antitrust Improvements Act.
The acquisition is part of Merit Medical's strategy to enhance its growth, particularly in the electrophysiology (EP) and cardiac rhythm management (CRM) sectors.
The company aims to replicate the efficient growth it has achieved with previous acquisitions. Despite the purchase multiple being 5.7 times the fiscal year 2023 sales, which may appear high for a business growing at approximately 8%, Merit Medical expects the integration of Cook's assets to potentially stimulate greater organic revenue growth.
However, in the short term, the Lead Management Portfolio is projected to add only $4 million to $6 million to Merit's revenue and is likely to dilute adjusted margins for the remainder of fiscal year 2024.
The company forecasts a more substantial revenue contribution in fiscal year 2025 and an increase in earnings per share (EPS) on a non-GAAP basis in the second full year after the deal's completion, as per updated guidance from Merit Medical.
The firm sustained its Buy rating and a price target of $125, signaling its belief in the company's potential for sustained growth and profitability post-acquisition.
InvestingPro Insights
Merit Medical Systems, Inc. (NASDAQ:MMSI) has been under the investor's microscope, especially after its recent acquisition announcement. With a market capitalization of $5.79 billion and a revenue growth of 8.6% over the last twelve months as of Q2 2024, the company's financial health appears robust. The InvestingPro Tips suggest that while the stock is trading at a high earnings multiple, with a P/E ratio of 48.84, it is also expected to experience net income growth this year. This aligns with Merit Medical's anticipation of increased organic revenue growth following the integration of Cook Medical's Lead Management Portfolio.
Moreover, Merit Medical has demonstrated a strong return over the last three months, with a 19.14% price total return, and a significant price uptick over the last six months at 33.82%. These metrics, along with the fact that the stock is trading near its 52-week high, at 98.82% of the peak price, indicate a positive momentum that could interest investors. It's worth noting that the company operates with a moderate level of debt and has liquid assets that exceed short-term obligations, suggesting financial stability.
For those seeking additional insights, there are more InvestingPro Tips available at https://www.investing.com/pro/MMSI, which could further inform investment decisions regarding Merit Medical Systems, Inc.
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