| Valuation method | Value, £ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 64.70 | -52 |
| Intrinsic value (DCF) | 69.53 | -48 |
| Graham-Dodd Method | n/a | |
| Graham Formula | n/a |
Masimo Corporation (LSE: 0JZ2.L) is a global leader in noninvasive patient monitoring technologies and hospital automation solutions. Headquartered in Irvine, California, Masimo specializes in advanced pulse oximetry, including its proprietary Masimo Signal Extraction Technology (SET), which enhances accuracy in motion and low-perfusion conditions. The company's innovative Rainbow SET platform expands monitoring capabilities to hemoglobin species, oxygen content, and respiratory metrics, while its SedLine technology provides critical brain function monitoring. Masimo also offers capnography, regional oximetry, and hemodynamic monitoring solutions. Its Hospital Automation platform integrates patient surveillance and connectivity, improving clinical workflows. Serving hospitals, EMS providers, and home care markets, Masimo combines direct sales with OEM partnerships and e-commerce distribution. With a strong R&D focus, Masimo continues to drive innovation in medical monitoring, positioning itself as a key player in the $50B+ global patient monitoring industry.
Masimo presents a high-risk, high-reward proposition for investors. The company holds leading technology in noninvasive monitoring (particularly SET pulse oximetry with ~40% US hospital market penetration) and is expanding into higher-margin automation solutions. However, FY2023 showed concerning metrics: negative net income (-$304.9M), declining operating cash flow ($196.4M, down from prior years), and elevated debt ($846.1M against $177.6M cash). The 1.229 beta indicates volatility, likely tied to ongoing patent litigation and hospital capital expenditure pressures. Growth potential exists in international markets and wearable health tech (via the W1 watch), but execution risks remain. Valuation at ~8x revenue appears rich given profitability challenges. Suitable for investors with high risk tolerance seeking exposure to medtech innovation.
Masimo maintains competitive advantage through its clinically validated SET technology, which dominates hospital pulse oximetry where motion artifacts challenge competitors. The Rainbow platform's multi-parameter monitoring creates switching costs, as hospitals standardize on Masimo's ecosystem. However, the company faces intensifying competition: 1) Large medtech players like Medtronic are bundling monitoring with broader surgical/ICU solutions; 2) Emerging AI-driven startups threaten in analytics; 3) Low-cost Asian manufacturers pressure pricing in basic oximetry. Masimo's hospital automation push differentiates but requires significant salesforce investment. Intellectual property remains a core strength (1,600+ patents), though litigation with Apple highlights vulnerability to tech giants entering health monitoring. The lack of dividend and recent losses limit financial flexibility versus larger peers. Success hinges on converting technology leadership into recurring revenue through consumables and software subscriptions while defending premium pricing.