Masimo believes a smart age requires smart medical tests

Posted Jan 8th 2008 7:34PM by Joseph Lazzaro
Filed under: Stocks to Buy

Readers of this space know that the investment bias is toward large-cap companies with demonstrated business models and who have a competitive advantage in established markets, preferably with a favorable global trend as a support. But every once in while an exception is made for a smaller, innovative company, and along this line Masimo looks attractive.

Masimo Corporation (Nasdaq: MASI)'s signal extraction technology non-invasively monitors patients' arterial blood-oxygen saturation levels and pulse rates.

Analysts like MASI's product variation, which features pulse oximeters in both hand-held and stand-alone versions, and the company's client diversity: MASI has sold products to more than 35 medical equipment companies. The Reuters FY 2007/FY 2008 EPS consensus estimates for MASI are $0.66 to $0.50.

The risks? Analysts are keeping an eye on the development of potential, alternate technologies to pulse oximetry monitoring, as well as MASI's core component costs. Further, despite MASI's innovative technology and bright prospects, the company's short public history places it in the high-risk category.

Stock Analysis: Masimo is a high-risk stock not suitable for moderate-risk or low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from MASI's shares. Sell/Stop Loss if you were to purchase shares in this company: $18.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.

Tags: health care, MASI, Masimo, medical services, technology