Merit Medical Systems Shares Plunged: What You Need to Know

Updated

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of medical device maker Merit Medical Systems (NAS: MMSI) dropped as much as 14% this morning after the company reported worse-than-expected fourth-quarter results.

So what: In the fourth quarter, Merit reported a profit of $0.18 on a 12% rise in revenue, as well as a 150-basis-point expansion in gross margin. Unfortunately, Wall Street was looking for a bit more and the company fell $0.01 shy of the consensus EPS estimate for the quarter. The sellers really came out in force when Merit issued 2012 guidance that called for sales of $392 million to $402 million and non-GAAP EPS of $0.67 to $0.72. While sales fell in line with the Street's targets, Merit's forecast EPS is well below the $0.88 analysts had been looking for.

Now what: Merit is currently in the process of building three new manufacturing facilities and attempting to refocus its business on new product. I feel this will be successful for the company in the long run, but it could create some hiccups over the next few months as is clearly visible by the results last night. Merit isn't terribly expensive on a forward earnings basis, so it might be a stock worth adding to your watchlist and keeping a close eye on.

Craving more input? Start by adding Merit Medical Systems to your free and personalized watchlist so you can keep up on the latest news with the company.

At the time thisarticle was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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