Here's What's Hurting Masimo Corporation Stock Today

By Cory

What happened

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Shares of Masimo Corporation (NASDAQ: MASI), a medical technology company focused on patient monitoring technology, are down about 13.2% as of 11 a.m. EDT on Thursday. An otherwise stellar first-quarter earnings report was marred by adjusted earnings slightly below consensus estimates.

So what

After the bell yesterday, the company announced first-quarter results that missed consensus earnings estimates by $0.03 per share. Although GAAP results showed a huge earnings boost to $0.82 per share, a one-time tax benefit pumped up the official figure. Adjusting for the tax benefit, adjusted earnings came in at $0.57 per share. That was about 7.5% higher than the same period last year. Masimo Corporation's stock price had soared 144% during the year ahead of yesterday's earnings release, so even a slight hiccup was bound to lead to a market thumping.

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Adjusted earnings miss aside, it was a solid quarter for the maker of non-invasive patient monitoring devices. On the top line, Masimo beat estimates by about $3 million with $186.3 million in first-quarter revenue that was 8.8% higher than the previous-year period.

The first quarter of this year wasn't the company's best in terms of product shipments -- it was the third best. Masimo shipped about 47,900 oxygen meters, raising its global base of installed products 6.1% to about 1.525 million units.

Now what

You wouldn't know it by looking at today's price movement, but Masimo Corporation raised its full-year outlook a few pegs. Total revenue is expected to reach $759 million this year, a slight bump from previous expectations of $752 million.

Today's market beatdown brings the price of Masimo stock down to about 6.8 times trailing sales from about 8 times sales earlier this week. By most yardsticks, the stock still looks somewhat pricey, but Masimo has a solid lead in an oxygen meter niche expected to grow to about $2.3 billion in just a few years. If the company can ride this trend while staying a step ahead of the competition, today's pullback could be a bargain opportunity.

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Cory Renauer has no position in any stocks mentioned. The Motley Fool recommends Masimo. The Motley Fool has a disclosure policy.