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) jumped 10% today after the company announced an extended royalty agreement with Covidien (NYSE: COV).

So what: The agreement is an extension of an agreement signed in 2006 and will pay Masimo 7.75% of sales in the United States. Masimo said it might invest 50% of the royalty payments into further growth of its business.

Now what: The increased certainty is great news for Masimo, and continued investment in the business should be seen as a positive. At a price-to-earnings multiple of 26, shares trade a little richer than I would like given current performance. I'll wait to buy shares until I see a pullback in shares or more positive news when the company releases earnings on Feb. 15.

Interested in more info on Masimo? Add it to your watchlist.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

Covidien is a Motley Fool Inside Value selection. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.