Why Masimo (MASI) stock plunged 37% today?

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Why Masimo (MASI) stock plunged 37% today?

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 Why Masimo (MASI) stock plunged 37% today?
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Highlights

  • Masimo Corporation (NASDAQ: MASI) revenue increased by 8.3% in fiscal 2021.
  • The medical technology company is acquiring Sound United for US$1.025 billion.
  • Masimo’s product revenue grew by 11.0% YoY to US$327.6 million in the fourth quarter.

The Masimo Corporation (NASDAQ: MASI) stock plunged more than 37% on Wednesday after reporting fourth-quarter and fiscal 2021 earnings in the extended market hours the day before. 

The MASI stock was down 37.08% to US$143.98 at 1:25 pm ET.

On Tuesday, the Irvine, California-based company announced to acquire technology firm Sound United for US$1.025 billion to leverage its expertise in expanding Masimo’s product reach.

Sound United specializes in audio products, but its acquisition may have seemed incongruous to investors and could be a reason for the stock’s fall on Wednesday. 

Masimo’s product revenue grew by 11.0% YoY to US$327.6 million in the fourth quarter, and the GAAP net income per share diluted was US$1.18.

For the full-year 2021, the product revenue rose 8.3% to US$1,239.2 million, while the GAAP net income per share diluted was US$3.98.

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The Sound United transaction is expected to close in mid-2022, subject to customary closing conditions. Masimo has hired Citigroup as its financial advisor. For Sound United, Stifel and Solomon Partners will act as financial advisors and Evercore as the lead financial advisor.

After the transaction, Sound United CEO Kevin Duffy will remain in his current role. 

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(Masimo stock plunged more than 37% after Sound United deal.

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Masimo’s Sound United

Masimo founder, chair & CEO Joe Kiani said that he has been a big fan of Sound United’s iconic brands and feels honored to steward the company through the next-gen tech evolution. He said Masimo shares Sound United’s commitment to providing pioneering products.

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Masimo has a market capitalization of US$7.98 billion and a P/E ratio of 36.32.

 Bottomline

The Masimo stock fell 46.15% in one year and 49.46% YTD. The company offers medical devices for noninvasive patient monitoring. The company has developed signal processing algorithms to measure blood oxygenation levels. However, investors should carefully evaluate the company and the broader market before investing in the stock.

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