BDX - Merit Medical: Undervalued With Multiple Growth Drivers In Play

2024-06-15 06:22:52 ET

Summary

• Merit Medical has shown solid performance with revenue and EBITDA growth, but has only tracked the broader med-tech market higher as investors wait for more exciting drivers.
• The company's WRAPSODY endovascular stent graft has potential to exceed management's projections, and could be a practice-changing $100M+ product with good clinical data.
• Merit's December 2023 convertible debt offering was well in excess of corporate needs, which leads me to believe that M&A is back on the table.
• I can argue for a fair value in the mid-$90's and there are multiple avenues for Merit Medical management to create value beyond that.

“Hurry up and wait” remains the order of the day for Merit Medical (MMSI) and its shareholders. While the company has executed pretty well since my last update (some revenue and EBITDA outperformance), and the shares are up about 20%, I suspect there may be some investor frustration that there hasn’t been more news to drive a fundamental shift in investment theses – the company has been reasonable (if not conservative) with guidance, hasn’t done any big M&A, and has just stuck to its knitting....

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