Masimo stock surged Wednesday on its upbeat earnings and 2025 outlook, though one analyst cautioned cost reductions could squeeze future profitability.
During the fourth quarter, Masimo earned an adjusted $1.80 per share, soaring 44% year over year and beating expectations for $1.42 a share. The company also beat its own guidance for $1.35 to $1.50 per share.
Sales were in line with Masimo's preannouncement at $601 million, up about 9%.
Masimo stock rose a fraction to 47.59, wiping out of much bigger gain of nearly 13% in earlier trades. Shares broke out of a flat base with a buy point at 180.97 on Jan. 30. Later, the stock fell as much 8% below that point, triggering a sell rule. Savvy investors are encouraged to cut their losses when a stock falls 7% to 8% below its entry.
Masimo Stock: Extra Sales Week
Needham analyst Mike Matson retained his hold rating on Masimo stock despite the solid profit beat. He is concerned "that its aggressive cost reductions are likely to compromise future earnings growth."
For the current year, Masimo projects $1.5 billion to $1.53 billion in health care revenue, up 8% to 11%, excluding the impact of exchange rates. The company also calls for $5.10 to $5.40 earnings per share, minus some items.
Analysts currently project $1.52 billion and adjusted earnings of $5.25 per share. Matson noted Masimo will benefit from an extra week of sales in 2025. The company expects that to add 1% to revenue, he said in a report.
50-Day Line In Rearview
Though Masimo stock dropped into a sell zone earlier this month, shares still have a strong IBD Digital Relative Strength Rating of 90. This means Masimo stock has performed in the leading 10% of all stocks over the last 12 months.
Shares also bounded above their 50-day line on Wednesday, MarketSurge shows.
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
