Merit Medical's Recent M&A Efforts Set To Show Early Impact In FY24: Analyst Insight

Barrington Research analyst Michael Petusky reiterated an Outperform rating on Merit Medical Systems, Inc. MMSI, with a price target of $95.

Merit Medical is expected to report its financial results for the second quarter of 2023 in about three weeks.

The company stated in late April that it expects to deliver 4%-6% revenue growth in 2Q on a reported basis and 5%-7% top-line growth on a constant currency basis. The analyst's estimate is $310.8 million, or approximately a 5.4% gain. 

Petusky expects Merit's peripheral intervention (PI) business to grow 9% Y/Y to $120.9 million, while the cardiac intervention is estimated to generate $92.3 million, up 3% Y/Y in 2Q.

The analyst notes that custom procedural solutions are expected to fall by 1% to $48.6 million, while OEM is estimated to deliver $39.5 million, up by 6.5%.

Petusky's estimates are slightly above the company's guidance range and expects $0.78 in adjusted EPS in the second quarter (or 6.9% adjusted EPS growth). 

The analyst expects Merit to continue affirming its multi-year growth plan foundations, generating at least $300 million in aggregate free cash flow in 2021, 2022, and 2023.

Merit is estimated to provide an update on the early impact of its recent M&A efforts (PI assets in early June), notes the analyst. 

While the transactions are expected to be slightly dilutive to adjusted EPS in FY/23, they are viewed as strategic and likely accretive to adjusted EPS beginning in FY/24. 

Petusky assumes approximately $200 million in net debt 12 months from now.

The analyst expects gross profit in the quarter to be reported to be $145.46 million, up 7.7% on year. Operating income is expected to rise by 63.1% on year to $37.92 million. 

Price Action: MMSI shares are trading lower by 1.46% to $79.74 on the last check Thursday.