Key Takeaways
- Focus on specialty sales, innovation, and new leadership is expected to boost market share, revenue, and global operational effectiveness.
- Expansion into at-home monitoring and efficiency improvements aim to increase recurring revenue, reduce costs, and stabilize earnings.
- Exposure to tariffs, shifting revenue models, dependence on hospital contracts, early-stage diversification, and customer consolidation threaten margins, revenue growth, and long-term earnings stability.
Catalysts
About Masimo- Develops, manufactures, and markets various patient monitoring technologies, and automation and connectivity solutions worldwide.
- The expansion of dedicated specialty sales teams and realignment of the commercial structure is expected to drive increased market share in high-growth categories like capnography, brain monitoring, and hemodynamics-where current share is below 20%-which should accelerate top-line revenue growth and elevate long-term earnings.
- Ongoing innovation including next-gen monitors featuring advanced AI algorithms and redeployment of novel sensor technologies positions Masimo to command premium pricing and capture greater value as hospitals prioritize technologically advanced, multiparameter solutions, supporting both revenue expansion and improved gross margins.
- New leadership hires in key areas (commercial, Asia-Pacific, marketing, regulatory, digital/IT, operations) are expected to enhance operational execution, market access, and global expansion, which should support stronger international revenue growth and more predictable earnings over time.
- Significant opportunities in wearable and telemonitoring solutions-currently in pilot phase-position the company to address the rising demand for at-home and remote patient monitoring, increasing Masimo's total addressable market and providing a new, recurring revenue source that will smooth earnings volatility from equipment sales.
- Strategic operational efficiencies and ongoing tariff mitigation efforts have resulted in substantial operating margin expansion and are expected to further reduce cost pressures, directly benefiting net margins and supporting EPS growth both in the near and medium term.
Masimo Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Masimo's revenue will decrease by 5.0% annually over the next 3 years.
- Analysts assume that profit margins will increase from -12.5% today to 15.9% in 3 years time.
- Analysts expect earnings to reach $293.5 million (and earnings per share of $6.24) by about August 2028, up from $-269.7 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $352.8 million in earnings, and the most bearish expecting $247.8 million.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 45.4x on those 2028 earnings, up from -29.1x today. This future PE is greater than the current PE for the US Medical Equipment industry at 27.7x.
- Analysts expect the number of shares outstanding to grow by 2.07% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 7.62%, as per the Simply Wall St company report.
Masimo Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- Heightened exposure to new and fluctuating global tariffs (particularly on goods manufactured in Malaysia, China, and Mexico) creates persistent cost of sales headwinds; while mitigation has helped in 2025, further increases or failure to achieve additional exemptions could compress gross and operating margins in future years.
- The transition of certain revenue streams from capital equipment sales to operating lease accounting (ASC 842) is creating growth headwinds and may result in longer-term pressure on reported revenue growth rates, particularly if hospital capital budgets remain constrained or delay purchasing decisions.
- Heavy reliance on hospital contracts-often tied to slow renewal and competitive OEM cycles-means top-line growth depends on timing and success in winning large, lumpy contracts; any shortfall or greater competition from commodity or tech-based providers could reduce revenue visibility and growth.
- The company's entry into adjacent monitoring markets (capnography, hemodynamics, brain monitoring, automation) is still early-stage, with current market shares under 20% in each segment; if Masimo fails to achieve planned product innovation or sales force execution, it may not realize the targeted 10–20% growth, limiting long-term revenue expansion.
- The risk of customer consolidation (e.g., large hospital systems, group purchasing organizations) and possible pressure from OEM partners like Philips or emerging low-cost competitors could erode pricing power and margins, negatively impacting future earnings and cash flow.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $187.571 for Masimo based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $210.0, and the most bearish reporting a price target of just $170.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.8 billion, earnings will come to $293.5 million, and it would be trading on a PE ratio of 45.4x, assuming you use a discount rate of 7.6%.
- Given the current share price of $144.65, the analyst price target of $187.57 is 22.9% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
How well do narratives help inform your perspective?
Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.