Should You Buy MMSI as Growth Improves but Valuation Stays Elevated?

Merit Medical Systems, Inc. MMSI is showing a better operating trajectory as therapeutic products, recent launches and acquisitions broaden its growth mix. Earnings expectations have also improved, strengthening the fundamental case.

The trade-off is valuation. MMSI still carries a premium to its Zacks sub-industry, leaving less room for execution misses even as its growth outlook becomes more favorable.

Merit Medical’s Growth Case Is Getting Stronger

For 2026, the Zacks model projects revenues and adjusted earnings per share to increase 7.6% and 11.5%, respectively. The company also raised its 2026 revenue and adjusted earnings outlook after stronger-than-expected first-half results.

From 2025 through 2028, revenues and adjusted earnings are projected to post compound annual growth rates of 6.2% and 8.9%, respectively. Therapeutic products are expected to grow at a 9.1% rate, ahead of 4.7% for Foundational products, improving the mix toward faster-growing categories.

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MMSI’s Valuation Leaves Less Room for Error

MMSI trades at 20.3X forward 12-month earnings compared with 17.6X for its Zacks sub-industry. That premium means further upside depends more heavily on sustained revenue growth, margin execution and continued earnings delivery.

The multiple is below MMSI's five-year median of 24.5X, which tempers the valuation concern. Still, the stock is not inexpensive relative to its sub-industry, so stronger fundamentals need to translate into consistent results.

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New MMSI Platforms Add Longer-Term Optionality

The View Point Medical acquisition added the OneMark Detection Imaging System and OneMark Tissue Markers to Merit Medical's oncology portfolio. Combined with the late-May launch of SCOUT MD, the technologies broaden breast-care localization options across diagnosis and surgery.

Endoscopy also gained the Resilience Through-the-Scope Esophageal Stent and C2 CryoBalloon. WRAPSODY remains a multi-year renal-therapy opportunity, although the unchanged $7 million U.S. revenue assumption for 2026 keeps near-term expectations measured.

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Merit Medical Faces Tariff and Execution Risks

Management now expects a 2026 tariff burden of approximately $16 million, or 21 cents per share, up from its prior assumption. Buyer consolidation, distributor dependence in some international markets and currency volatility can also pressure pricing and visibility.

Competition remains broad. Boston Scientific Corporation BSX operates across endoscopy and cardiovascular devices, creating overlap with several Merit Medical procedure areas. Medtronic plc MDT also reports Cardiovascular and Surgical & Endoscopy businesses, underscoring the need for Merit Medical to support launches while defending established positions.

MMSI’s Balance Sheet Supports Strategic Flexibility

Merit Medical ended the second quarter with $448.7 million in cash and cash equivalents and $736.3 million in long-term debt. Its debt-to-capital ratio was 30.5%, below the industry level of 50.5%.

Management is building an M&A playbook and broader capital-allocation framework as part of its 2027-2029 strategic planning process. That liquidity can support potential tuck-in acquisitions and product-pipeline priorities, although deployment discipline remains important.

MMSI Signals Support a Patient Stance

MMSI's improving growth mix, portfolio expansion and stronger earnings outlook support the fundamental case, but the valuation premium and execution risks argue against treating the setup as an easy decision. The balance remains constructive rather than decisive.

The stock currently carries a Zacks Rank #3 (Hold). Its Momentum Score of A and VGM Score of B are favorable, while its Value Score of C and Growth Score of C are more middle-of-the-pack. Taken together, the signals support patience while investors watch whether execution can justify the premium. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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