Masimo initiated with a Neutral at BofA on lack of imminent growth inflection

As previously reported, BofA analyst Travis Steed initiated coverage of Masimo (MASI) with a Neutral rating and $162 price target. Masimo’s flagship product, Signal Extraction Technology pulse oximetry, monitors a patient’s blood oxygen levels in real time and the business is about 90% recurring revenue and there’s opportunity to take share in the Philips (PHG) installed base, the analyst tells investors. However, the firm starts at Neutral given a current valuation it views as already reflecting much of the margin upside. The firm does not see revenue growth materially accelerating higher as it will take time for Masimo to launch its new products and for its new commercial strategy to contribute to revenue, the analyst added.