Wells Fargo has adjusted its price target for Merit Medical Systems (MMSI, Financial), reducing it from $117 to $106 while maintaining an Overweight rating. This adjustment follows Merit Medical's announcement of first-quarter sales and earnings per share (EPS) that surpassed market expectations. The company has also reaffirmed its sales guidance for the fiscal year 2025.
Despite the positive quarterly performance, Wells Fargo's revision reflects concerns about the fiscal year 2025 EPS forecast, which is expected to be affected by tariffs and convertible securities. However, Merit Medical anticipates that the impact of these factors will diminish by fiscal year 2026, thanks to planned mitigation strategies.
MMSI Key Business Developments
Release Date: February 25, 2025
- Total Revenue: $355.2 million, up 9% year-over-year on a GAAP basis and 10% on a constant currency basis.
- Non-GAAP Operating Margin: 19.6% of sales, up approximately 305 basis points year-over-year.
- Non-GAAP Earnings Per Share: Increased 26% year-over-year.
- Non-GAAP Gross Margin: 53.5%, up 304 basis points year-over-year.
- Free Cash Flow: More than $185 million for fiscal year 2024, up 67% year-over-year.
- Cardiovascular Segment Revenue Growth: 8% year-over-year.
- Endoscopy Segment Revenue Growth: 88% year-over-year.
- Net Income: $56.3 million or $0.93 per share, compared to $43.1 million or $0.74 per share in the prior year period.
- Operating Expenses: Increased 9% year-over-year.
- Cash and Cash Equivalents: $376.7 million as of December 31, 2024.
- Total Debt Obligations: $747.5 million as of December 31, 2024.
- US Sales Growth: Increased nearly 14% on a constant currency basis.
- International Sales Growth: Increased 5% year-over-year on a constant currency basis.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Merit Medical Systems Inc (MMSI, Financial) reported a total revenue of $355.2 million for Q4 2024, marking a 9% year-over-year increase on a GAAP basis and a 10% increase on a constant currency basis.
- The company achieved a non-GAAP operating profit growth of 30% and a non-GAAP operating margin of 19.6%, up approximately 305 basis points year-over-year.
- Non-GAAP earnings per share grew by 26%, exceeding the high end of expectations.
- Merit Medical Systems Inc (MMSI) generated strong free cash flow of more than $185 million in 2024, up 67% year-over-year.
- The Cardiovascular segment saw an 8% growth, and the Endoscopy segment experienced an 88% growth in Q4 2024.
Negative Points
- The company's EPS guidance for 2025 was perceived as conservative, partly due to accounting on the convertible note, which added $0.11 of dilution.
- International sales growth was softer than expected, particularly in the EMEA region, due to softness in Russia and distributor markets.
- Operating expenses increased by 9% in Q4 2024, driven by a 6% increase in SG&A expenses and a 26% increase in R&D expenses.
- The Endoscopy segment's guidance for 2025 was slightly lower than anticipated, attributed to the integration of two sales forces.
- Merit Medical Systems Inc (MMSI) faces potential headwinds from tariffs, which are not factored into the 2025 financial guidance.
