Merit Medical Systems, Inc.MMSI is well-poised for growth in the coming quarters, courtesy of its strong product portfolio. The optimism, led by solid product performance, global expansion and strategic M&A, is expected to contribute further. However, China market pressures and gross margin headwinds from manufacturing costs, freight and tariff remain concerns.
This Zacks Rank #3 (Hold) company's shares have gained 1.7% in the year-to-date period compared with the industry's 19.8% growth and the S&P 500's 6.8% rise.
The renowned medical device provider has a market capitalization of $5.43 billion. The company projects 10.6% growth for the next five years and expects to maintain its strong performance going forward. It delivered an average earnings surprise of 13% for the past four quarters.
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Let's delve deeper.
MMSI's Growth Drivers
Broad-Based Growth Across Foundational and Therapeutic Products:Merit Medical Systems continues to benefit from strong demand across its diversified product portfolio. Third-quarter 2026 revenues increased 8% year over year to $416 million. Foundational product sales grew 8% organically, driven primarily by vascular intervention, access and OEM platforms. Therapeutic product sales increased 11%, supported by oncology, endoscopy and OEM, along with contributions from vascular intervention and cardiac therapies. Strong U.S. demand and improving growth trends across both categories provide a solid foundation for continued expansion.
Product Innovation and Clinical Evidence:Merit Medical is expanding its addressable markets through product innovation and growing clinical evidence. Its oncology portfolio is benefiting from the rollout of SCOUT MD and the integration of View Point Medical's OneMark technology, which allows breast cancer lesions to be marked during biopsy, potentially reducing the need for a separate localization procedure before surgery. In endoscopy, growing clinical evidence supporting the EsophyX-based cTIF procedure is another positive. The WRAPSODY renal therapies platform and global embolics business offer further growth opportunities, supported by encouraging physician feedback and clinical developments.
Portfolio Expansion Through Strategic Acquisitions:Merit Medical's targeted acquisitions are strengthening its presence in attractive procedural markets. The acquisition of Solo Pace for approximately $45 million expands its cardiac therapies portfolio with temporary pacing technologies designed for transcatheter aortic valve replacement (TAVR) and other transcatheter heart valve procedures. With more than 100,000 TAVR procedures performed annually in the United States, the technology offers an opportunity to leverage Merit's existing commercial, clinical and physician education capabilities. Management also continues to pursue selective tuck-in acquisitions to address portfolio gaps and support long-term growth.
MMSI Stock: Key Challenges to Watch
Competitive Pressure in Key Product Markets:Merit Medical faces established competitors in attractive markets, particularly its WRAPSODY renal therapies platform. Management acknowledged that competitors are responding aggressively, including expanding their sales teams, making market penetration challenging despite positive physician feedback on WRAPSODY's clinical performance. Such competitive activity could affect adoption and the company's ability to achieve its growth expectations.
China Market Uncertainty:Pricing pressures under China's volume-based procurement (VBP) system, government scrutiny of physician purchasing practices and preferences for domestically manufactured products continue to create challenges. Management slightly reduced its second-half China outlook by approximately $4 million and acknowledged limited visibility into when market conditions may improve. These factors could constrain international growth.
Gross Margin and Tariff-Related Cost Pressures:Third-quarter gross margin declined 81 basis points year over year to 52.8%, primarily due to unfavorable manufacturing variances and higher freight and distribution expenses. Raw material costs, particularly platinum, also pressured margins. Management continues to factor approximately $16 million of incremental tariff-related costs into its 2026 guidance, creating another profitability headwind.
Merit Medical Systems, Inc. Price
Merit Medical Systems, Inc. price | Merit Medical Systems, Inc. Quote
Estimate Trend
MMSI is witnessing a stable estimate revision trend for 2026. In the past 30 days, the Zacks Consensus Estimate for earnings per share (EPS) has remained unchanged at $4.30.
The Zacks Consensus Estimate for the company's fourth-quarter 2026 revenues is pegged at $421.9 million, suggesting a 7.1% rise from the year-ago reported number. The consensus mark for EPS is pegged at $1.11, implying 6.7% growth from the prior-year reported figure.
Stocks to Consider
Some better-ranked stocks from the broader medical space are GlaukosGKOS, Intuitive SurgicalISRG and West Pharmaceutical ServicesWST.
Glaukos, currently sporting a Zacks Rank #1 (Strong Buy), has an estimated earnings growth rate of 155.6% for 2026. The company's earnings beat estimates in three of the trailing four quarters and missed once, the average surprise being 138.6%. You can see the complete list of today's Zacks #1 Rank stocks here.
GKOS' shares have rallied 94.8% compared with the industry's 2.5% growth in the year-to-date period.
Intuitive Surgical, currently carrying a Zacks Rank #2 (Buy), has a long-term estimated growth rate of 15.5%. The company's earnings surpassed estimates in each of the trailing four quarters, the average surprise being 15.1%.
ISRG's shares have lost 17.3% against the industry's 2.5% growth in the year-to-date period.
West Pharmaceutical, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 17.4%. The company's earnings surpassed estimates in the trailing four quarters, the average surprise being 18.6%.
WST's shares have jumped 42.6% compared with the industry's 19.8% growth in the year-to-date period.
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This article originally published on Zacks Investment Research (zacks.com).
