Medical tech company Masimo’s stock drops 35% after disclosing $1 billion acquisition of Sound United

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Medical technology company Masimo Corp. MASI sharing,
+0.18%
fell 35% on Wednesday, to mark its biggest ever percentage drop, a day after the company announced its biggest deal ever, the acquisition of consumer technology company Sound United for around $1 billion. dollars. Sound United owns consumer audio brands such as Bowers & Wilkins, Denon, Polk Audio and Marantz. The transaction is expected to close mid-year and be financed with a combination of cash and borrowings under a new credit facility. Masimo said it would immediately increase adjusted earnings per share at the close. “The Sound United transaction aligns with Masimo’s priorities, goals and vision by advancing our strategy to enable connected monitoring both in the hospital and at home,” Chief Executive Joe Kiani said in a statement. a statement. Raymond James said the deal was likely to come as a surprise to investors, as it mostly heralded online earnings. “The deal has the potential to dilute near-term revenue growth and margin profile, but it significantly accelerates MASI’s move into the house,” analyst Jayson Bedford wrote in a note. “While not a change in strategy, most investors thought the home transformation would be more gradual.” Bedford values ​​the stock based on market performance. Needham analysts agreed. “We do not expect a positive reception from investors despite the EPS increase and we expect the increase to be offset (or even more than offset) by a multiple contraction and we maintain our Hold rating. “wrote the analysts led by Mike Matson. Masimo shares have fallen 46% in the past 12 months, while the S&P 500 SPX,
+1.17%
gained 14%.


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