MERIT MEDICAL SYSTEMS INC (MMSI): what the price assumes

In the published model solve dated 2026-Q2, anchored at $87.19, MERIT MEDICAL SYSTEMS INC (MMSI) is priced for +20.1% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-27.

Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/MMSI

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 8.4% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~8.1pp.

How unusual the bet is: within-range

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.2%); the inversion above states its own rate.

Per-Model Detail (n=18)

Solvency

Bullet Takeaways

• Merit Medical makes disposable devices for interventional and diagnostic procedures across cardiology, radiology, oncology, and endoscopy, a steady, procedure-driven business that grew first-quarter sales 7.5% to $381.9 million and runs a gross margin near 48%.
• The single number that defines the bet is growth: the price embeds roughly 15% annual operating growth, while recent organic, constant-currency growth ran about 3.7%, so the gap between priced-in and delivered is the whole debate.
• The biggest near-term risk is margin: tariffs cut about 120 basis points from first-quarter gross margin, and competition from larger device makers pressures pricing, both of which work against the margin expansion the valuation assumes.

Bull Case

The number that decides this stock is the margin, and it is moving the right way. First-quarter non-GAAP operating margin improved to 19.7% from 19.3%, non-GAAP EPS rose 9% to $0.94 and beat estimates, and free cash flow jumped 26%, all while the company absorbed a 120-basis-point tariff hit to gross margin. Expanding margin in the face of a tariff headwind is the bull's strongest evidence: it says the underlying operating leverage is real, because the company is offsetting an external cost increase and still lifting profitability. If that margin trajectory continues, the earnings compound faster than the revenue, which is exactly what a maturing medtech is supposed to do.

The business itself is the kind that grows quietly and durably. Merit sells disposable devices into interventional and diagnostic procedures across "cardiology, radiology, oncology, critical care and endoscopy," reported in two segments, cardiovascular and endoscopy. Disposables tied to procedure volume are inherently recurring: every catheter, every access device, every kit is used once and reordered, so revenue tracks the steady, demographically supported growth in medical procedures rather than any single product cycle. First-quarter sales grew 7.5% in total and 3.7% organically excluding a divestiture, with the higher-margin Therapeutic category up 10%.

The financial profile supports a long runway. Net debt sits at only about 1.3 times operating income, interest coverage runs above seven times, and the company holds a substantial liquid-asset balance, so it has ample room to fund both internal product development and bolt-on acquisitions, the two engines of growth in a device maker. Management guided full-year non-GAAP EPS to $4.01 to $4.15, up 5% to 8%. The bull case is that Merit is a well-run, broadly diversified medtech with a recurring revenue base, expanding margins, and a clean balance sheet, and that the steady mid-single-digit organic growth plus margin gains plus acquisitions compounds into the mid-teens earnings growth the price is paying for.

Bear Case

The disconnect is between what the company is delivering and what the price is asking. Merit's organic, constant-currency revenue grew about 3.7% in the most recent quarter, a respectable mid-single-digit rate for a mature device maker. But at $67.24 the price embeds something closer to 15% annual operating growth sustained for five years. That is a wide gap. The bull bridges it with margin expansion and acquisitions, which is fair, but it means the equity is not paying for the organic business as it stands; it is paying for the organic business plus a steady stream of margin gains and successful deals that have to keep arriving. When the priced-in growth is four times the organic rate, the burden of proof sits squarely on the parts that are hardest to guarantee.

The competitive structure makes that burden heavier. Merit competes, in its own words, against "large medical device companies with extensive product lines, many of which may have greater financial and other resources than we do, as well as firms which are more specialized." It is a mid-sized player in a market of giants, where the marketplace is "characterized by rapid technological advancement, industry and customer consolidation, customer demands for price reductions." Hospital purchasing groups consolidating buying power push on price, and a device maker without the scale of the largest competitors has less leverage to resist. Price pressure is the slow erosion that caps how much of the volume growth reaches the margin.

The near-term arithmetic shows the pressure is real, not theoretical. Tariffs cost about 120 basis points of gross margin in the first quarter, a direct hit the company had to work to offset. Return on equity sits in the high single digits, below the cost of equity, which is why the asset-value and earnings-power lenses read the stock as expensive: a company earning less than its cost of capital on its book is being valued for future improvement, not present returns. The balance sheet is sound, so solvency is not the worry. The worry is simpler: the price assumes the margin keeps climbing and the growth reaccelerates, while the recent organic rate, the competitive pressure, and the tariff drag all point to a business growing steadily but not spectacularly. If the margin gains stall, the multiple has a long way to fall to meet the fundamentals.

Valuation

The price is paying for growth that outruns the recent trend. At $67.24 the market values Merit at roughly twenty-five times trailing operating income, which inverts to about 15% annual operating growth held for five years. The company's recent organic growth ran closer to 3.7%, so the implied figure leans heavily on margin expansion and acquisitions doing the rest. Historically, only about half of comparable fast-growers have sustained a 15% pace even five years, so the bet is plausible but far from assured.

The methods divide the way they do for a growth-priced medtech with modest current returns. The peer-multiple and growth-based cash-flow lenses land near the price: a sector earnings multiple around twenty-four times and an exit-multiple cash-flow read both sit close to $67.24. The asset-value and earnings-power lenses say expensive, and the reason is the return on equity, in the high single digits, below the roughly 9% cost of equity. Book-value-plus-profitability math discounts a company earning less than its cost of capital, and the earnings-power method, which capitalizes a normalized no-growth profit, cannot credit the growth the price is paying for. The honest reading is that this is a growth-and-quality bet priced fully, not a value one: the static lenses are correct that today's returns do not support the price, and the dynamic lenses are correct that the growth might.

Solvency removes the downside tail and lets the debate stay on growth. Net debt of about $247 million is only roughly 1.3 times trailing operating income, interest coverage runs above seven times, and the company holds nearly $490 million of liquid assets, ample firepower for the product development and bolt-on acquisitions that the growth case requires. The share count is rising slightly, a mild dilution the per-share growth has to clear. The decisive question for the valuation is whether the margin expansion that lifted earnings last quarter, even against a tariff drag, is durable enough to carry the implied 15% when organic revenue is growing in the mid single digits. If it is, the price is fair for a quality compounder. If the margin gains plateau and the acquisitions slow, the multiple is the part that adjusts.

Catalysts

Merit Medical's first-quarter 2026 report beat and the company raised its outlook. Net sales rose 7.5% to $381.9 million, non-GAAP EPS climbed 9% to $0.94 and topped the $0.85 estimate, GAAP EPS reached $0.68, and free cash flow grew 26%. Non-GAAP operating margin improved to 19.7% despite a 120-basis-point tariff hit to gross margin, and the Therapeutic product category led growth at 10%. Organic, constant-currency growth excluding a divestiture was about 3.7%.

For the full year, Merit guided revenue to $1.612 billion to $1.634 billion and non-GAAP EPS to $4.01 to $4.15, up 5% to 8%. The catalysts that matter most are the pace of new product launches in the cardiovascular and endoscopy segments, the trajectory of organic growth relative to the mid-single-digit recent rate, and continued margin expansion in the face of tariffs. The risk to monitor on the other side is pricing: with hospital purchasing consolidation and larger device competitors pressing on price, and tariffs adding cost, the durability of the margin gains is the variable that decides whether the company grows into its valuation.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• ICUI (ICU MEDICAL INC/DE)
• FY2025 10-K: …of our products, including demand for more environmentally friendly products and focus on using materials of concern, access to distribution channels, patent protection and pricing. The ability to compete effectively depends on our ability to differentiate our products based on these factors, as well as our ability…
• FY2025 10-K: …The accounting policies of our single reportable segment are the same as those described in Note 1: Basis of Presentation and Significant Accounting Policies. For information on disaggregation of revenues by product-line and geography, see Note 4: Revenue. Our chief executive officer is our CODM. Our CODM uses net…
• LMAT (LEMAITRE VASCULAR, INC.)
• FY2025 10-K: …as cardiac surgeons, who can be served by our devices and tissue processing capabilities. • Low rivalry niche segments. We seek to build and maintain leading positions in niche segments, which we define as under $400 million in annual worldwide revenue. We believe that the relative lack of focus on these segments by…
• FY2025 10-K: …greater capital resources, larger customer bases, broader product lines, larger sales forces, and larger research and development or regulatory staffs and resources; • have stronger reputations and relationships with our target customers; • have developed more extensive distribution channels; • are or may be able to…
• ITGR (INTEGER HOLDINGS CORPORATION)
• FY2025 10-K: …capabilities and limited sales and marketing expertise. We believe that very few companies offer the scope of manufacturing capabilities and services that we provide to medical device companies; however, we may compete in the future against other companies that provide broad manufacturing capabilities and related…
• FY2025 10-K: …report. Although the majority of our customers contract with us to develop custom components and assemblies to fit their product specifications, we also provide system and device solutions ready for market distribution by OEMs. We have established close working relationships between our internal program managers and…
• HAE (HAEMONETICS CORPORATION)
• FY2025 10-K: …intense competition, and if we are unable to successfully expand our product lines through internal research and new product development or keep pace with rapid technological changes in the healthcare industry, our business may be materially and adversely affected. A significant element of our strategy is to increase…
• FY2025 10-K: EGMENT AND ENTERPRISE-WIDE INFORMATION The Company determines its reportable segments by first identifying its operating segments, and then by assessing whether any components of these segments constitute a business for which discrete financial information is available and where segment management regularly reviews…
• SOLV (SOLVENTUM CORPORATION)
• FY2025 10-K: …adoption of our Solventum™ 360 Encompass TM and performance management solutions. • Clinician productivity solutions declined primarily due to impacts from changing market conditions. • Foreign currency translation positively impacted sales by 0.2%. Business segment operating income margin increased when compared to…
• FY2025 10-K: …license from third parties IP that complements our internal R&D efforts and product offerings. While, in aggregate, our patents and other IP are vital to our operations, we do not consider any single IP asset or group of assets to be of material importance to any segment or to the business as a whole; rather, we…
• RMD (ResMed Inc.)
• FY2025 10-K: …Care Software business for the year ended June 30, 2025 was $641.4 million, compared to $584.1 million for the year ended June 30, 2024, an increase of $57.3 million or 10%. The increase was driven by continued growth in the Home Medical Equipment, or HME, and MEDIFOX DAN verticals within our Residential Care…
• FY2025 10-K: …rates and financial markets. Our combined sales of medical devices into Iran, Russia and Ukraine did not constitute a material portion of our total revenue in fiscal year 2025. Further escalation of geopolitical tensions, or new geopolitical tensions, could have a broader impact that expands into other markets where…
• WST (WEST PHARMACEUTICAL SERVICES, INC.)
• FY2025 10-K: …quality standards customers require and expect. This focus on quality includes a commitment to excellence in manufacturing, scientific and technical expertise and management, which enables us to partner with our customers in order to deliver safe, effective drug products to patients quickly and efficiently. Our…
• FY2025 10-K: .2%, in 2025, including a favorable foreign currency translation impact of $11.7 million. Excluding foreign currency translation effects, net sales increased by $11.6 million, or 2.1%, due primarily to an increase in sales of self-injection devices for obesity and diabetes, partially offset by a decrease in sales of…
• STE (STERIS plc)
• FY2025 10-K: …to outsourced instrument reprocessing services. In addition, our procedural products also include endoscopy accessories, instruments, and capital equipment infrastructure used primarily in operating rooms, ambulatory surgery centers, endoscopy suites, and other procedural areas. Our AST segment supports medical…
• FY2025 10-K: …changes for comparability, as required. For more information, refer to Note 4 titled, "Discontinued Operations." Non-allocated operating costs that support the entire Company and items not indicative of operating trends are excluded from segment operating income. Our Healthcare segment provides a comprehensive…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.