Bank of America: Masimo's Numbers Still at Risk

In a research report published earlier today, Bank of America noted that Masimo Corporation's MASI Q4 results and 2012 guidance are in-line, but data points are mixed. “Last night MASI reported Q4 results that were relatively in-line with consensus and with the revised guidance provided in October. MASI's 2012 guidance was also in-line with consensus, with management guiding to revs of $483mm (10% growth) and EPS of $1.20 (15% growth). Top-line trends in the quarter were mixed, however, as rainbow growth improved (up 16% vs flat growth last quarter) but the SET business – which still accounts for 90%+ of total revs – decelerated from the recent 16-17% growth to only 11%. Gross margins also continued to weaken, down 350bps y/y or 250bps excluding a $1mm write down. While the rainbow improvement is encouraging, the other Q4 trends make us concerned that 2012 guidance may be too high,” Bank of America commented in the report. Bank of America reiterates its Underperform rating and $19 PT on Masimo, which closed yesterday at $21.59.