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“Overall, we think the worst is behind MASI, following a challenging ’23 that included multiple downward revisions,” the analysts wrote in a note to clients Monday.
The downgrade comes even as Jefferies observes that Masimo’s trends and outlook have improved, especially in the HC business. Other positives include the company’s recent win vs. AAPL on its ITC challenge, and some relief post a ’24 guide that “alleviated concerns about costs returning and sapping EPS growth.”
“That said, we now see a lot of good news baked in and are moving to the sidelines based on valuation,” they wrote.
With shares up over 65% since October lows and trading at ~42x forward EPS, (~37x using new Non-GAAP), Jefferies no longer views MASI as cheap for growth, noting it traded through the previous price target.
“[F]undamental upside from here could be limited,” they wrote.
Following the downgrade, Masimo stock is trading down 1.95% Tuesday morning at $127.72.
