Merit Medical Systems is engaged in the development, manufacture and distribution of proprietary disposable medical devices used in interventional and diagnostic procedures, particularly in cardiology, radiology and endoscopy. The company was founded in 1987 and is based in South Jordan, Utah.
MMSI Price Forecast Based on DCF Valuation
DCF Fair Value Target:
The table below illustrates the output of a discounted cash flow forecast using a variety of scenarios for Merit Medical Systems Inc. To summarize, we found that Merit Medical Systems Inc ranked in the 24th percentile in terms of potential gain offered. Our DCF analysis suggests the stock is overvalued by about 63.5%. In terms of the factors that were most noteworthy in this DCF analysis for MMSI, they are:
Merit Medical Systems Inc's effective tax rate, as measured by taxes paid relative to net income, is at 24 -- greater than 86.48% of US stocks with positive free cash flow.
Merit Medical Systems Inc's interest coverage rate -- a measure of gross earnings relative to interest payments -- comes in at -2.06. This coverage rate is greater than that of only 16.23% of stocks we're observing for the purpose of forecasting via discounted cash flows.
The weighted average cost of capital for the company is 10. This value is greater than 82.68% stocks in the Healthcare sector that generate free cash flow.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
For other companies in the Healthcare that have a similar discounted cashflow valuation profile (and ensuing price forecasts) as MMSI, try ENTA, HSIC, SNN, HAPP, and HOLX.
* Q2 2020 worldwide revenue of $218.4 million, down (14.5)% as reported compared to Q2 2019 * Q2 2020 core revenue on a constant currency basis* down (13.6)% compared to Q2 2019 * Q2 2020 GAAP loss per share was $(0.34), compared to GAAP EPS of $0.12 in Q2 2019 * Q2 2020 non-GAAP EPS* was $0.31, compared to $0.42 in Q2 2019 * Q2 2020 free cash flow* was $32 million, and $47 million YTD* Core revenue on a constant currency basis, non-GAAP EPS, non-GAAP net income, non-GAAP operating margin, non-GAAP gross margin and free cash flow are non-GAAP financial measures. A reconciliation of these and other non-GAAP financial measures used in this release to their most directly comparable GAAP financial measures is included under the heading “Non-GAAP Financial Measures” below.SOUTH JORDAN, U...