Why Masimo Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Masimo (NASDAQ: MASI  ) , a developer of noninvasive patient monitoring products, rose as much as 11% after the company reported its first-quarter earnings results last night.

So what: For the quarter, Masimo saw total revenue rise 14% to $135.9 million, driven by a 14% increase in SET pulse oximetry sales and a 24% jump in Rainbow SET unit sales. Profits rose modestly to $0.28 per share from $0.27 in the previous year and were reduced by $0.03 due to unfavorable currency translation. Wall Street had been expecting Masimo to report a profit of $0.28 per share (in-line with estimates), but only $134.5 million in revenue.

Now what: This was a good report, but perhaps not worthy of a double-digit move higher. Masimo has now met expectations in four of the past five quarters and is going to rely on its newer Rainbow SET to drive bottom-line growth. However, at 17 times forward earnings and with decelerating sales growth, I'm not sold that it's a fantastic value. I believe the best approach here might be to wait and see if it can keep up its double-digit growth for a few more quarters.

Craving more input? Start by adding Masimo to your free and personalized Watchlist so you can keep up on the latest news with the company. 

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