Masimo could take a $100 million bite out of Apple's annual sales, an analyst said Friday as MASI stock surged after winning a patent battle against the tech giant.
The U.S. International Trade Commission said Apple violated patent laws by incorporating Masimo's pulse oximetry technology into its Apple Watch. This technology is a noninvasive method of measuring the saturation of oxygen in a person's blood.
The ruling "sends a powerful message that even the world's largest company is not above the law," Masimo Chief Executive Joe Kiani said in a statement. "This important determination is a strong validation of our efforts to hold Apple accountable for unlawfully misappropriating our patented technology."
On today's stock market, MASI stock jumped 2.1%, ending the regular session at 82.58. Apple stock also rose 0.8% to 168.22.
MASI Stock: Potential Sales Boost
Masimo makes pulse oximeters used in hospitals. These devices are based on its "signal extraction technology," or SET. For the third quarter, analysts surveyed by FactSet expect Masimo's SET sales to sink 4.5% year over year to $276 million.
But things could be looking up, says Needham analyst Mike Matson.
The commissioners issued an exclusion order for Apple's devices that use Masimo's technology. This would prevent their entry into the U.S. for a 60-day period and allow the Biden Administration to review the order. Apple is likely to appeal the decision, staying the exclusion order.
"If Masimo is ultimately successful, we think Apple might be forced to pay royalties if it is unable to change the Apple Watch to avoid infringement," Matson said in a report. "We estimate that the royalties could be $1 to $2 per Apple Watch, which would total $50 million to $100 million of annual revenue or 65 cents to $1.30 of (earnings per share) based on annual sales of 50 million Apple Watch units."
He kept his buy rating and 136 price target on MASI stock.
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