US$57.38 - That's What Analysts Think Merit Medical Systems, Inc. (NASDAQ:MMSI) Is Worth After These Results

Investors in Merit Medical Systems, Inc. (NASDAQ:MMSI) had a good week, as its shares rose 5.3% to close at US$51.59 following the release of its third-quarter results. Results overall were mixed; even though revenues of US$244m beat expectations by 12%, statutory losses were US$0.05 per share, 20% larger than what the analysts had forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Merit Medical Systems after the latest results.

See our latest analysis for Merit Medical Systems

After the latest results, the nine analysts covering Merit Medical Systems are now predicting revenues of US$1.04b in 2021. If met, this would reflect a solid 8.4% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Merit Medical Systems forecast to report a statutory profit of US$0.99 per share. Before this earnings report, the analysts had been forecasting revenues of US$1.03b and earnings per share (EPS) of US$0.80 in 2021. Although the revenue estimates have not really changed, we can see there's been a great increase in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 12% to US$57.38. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Merit Medical Systems, with the most bullish analyst valuing it at US$72.00 and the most bearish at US$45.00 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Merit Medical Systems' revenue growth is expected to slow, with forecast 8.4% increase next year well below the historical 14%p.a. growth over the last five years. Compare this to the 253 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 9.6% per year. So it's pretty clear that, while Merit Medical Systems' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Merit Medical Systems following these results. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Merit Medical Systems analysts - going out to 2022, and you can see them free on our platform here.

You can also see whether Merit Medical Systems is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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