Future Of Merit Medical Systems: Analyst Predictions On Revenue Growth And Operating Margin Improvement

Needham analyst Mike Matson reiterated a Buy rating on the shares of Merit Medical Systems, Inc. MMSI, raising the price target to $96 from $90, just after the company announced the acquisition of Dialysis and Biopsy products from AngioDynamics, Inc. ANGO.

The analyst applauds the $100 million deal, viewing it as the company's "first meaningful" acquisition in several years. The analyst adds that the financial aspects of the agreement are attractive.

The acquired assets from AngioDynamics complement MMSI's existing hemodialysis catheters, peritoneal dialysis catheters, PTA balloon catheters, and WRAPSODY stent graft (which has a CE Mark but is not FDA approved yet), the analyst notes. 

Related: AngioDynamics Divests Dialysis Portfolio And Biopsy Product Line To Merit Medical Systems For $100M

In a separate deal, Merit Medicals also acquired the Surfacer Inside-Out Access Catheter System from Bluegrass Vascular Technologies (private) for $32.5 million.

Considering the accretive deals, Matson believes that revenue growth will return to the mid-single digits or better for Merit Medicals and EPS growth will return to 15%+.

The analyst notes that management is implementing a detailed plan to drive its operating margin higher and improve cash flow, aiming to reach an 18-21% operating margin in 2023.

Price Action: MMSI shares are trading lower by 0.81% to $83.58 on the last check Friday.