The Zacks Analyst Blog Highlights: Boeing, Masimo, RTI Surgical, Accuray and Globus Medical

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May 15, 2014, 09:30 ET

CHICAGO, May 15, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Boeing Co. (NYSE:BA-Free Report), Masimo Corporation (Nasdaq:MASI-Free Report), RTI Surgical Inc. (Nasdaq:RTIX-Free Report), Accuray Inc. (Nasdaq:ARAY-Free Report) and Globus Medical, Inc. (NYSE:GMED-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Wednesday's Analyst Blog:

Boeing Welcomes China's 9 Air

The Boeing Co. (NYSE:BA-Free Report) has secured a commitment for 50 of its 737 aircraft from China's newest low-cost airline – 9 Air. A surge in the middle class population and growing demand for cheap flying options have made low-cost travel a hot business in this region.

9 Air, an affiliate of Juneyao Airlines Co., has plans to introduce the next-generation models of the 737 and 737 Max to its all-Boeing fleet. This new low-cost carrier plans to start domestic services in China in order to meet growing air traffic demand in the region.

As per Boeing's list prices, its 737 aircraft generally sells for $76 million to $109.9 million. On the basis of these prices, the latest order may come in a price band of $3.8 billion and $5.5 billion. We expect 9 Air to get a discount on list prices as is the custom with Boeing on bulk orders.

Low cost carriers, with their ability to stimulate traffic with low fares, are growing faster than the market as a whole. There is also a strong demand to replace older, less fuel-efficient airplanes. The market for new airplanes is set to become more geographically balanced in the next two decades. Asia-Pacific, including China, will however continue to lead the way in total airplane deliveries.

Earlier, Boeing had already revealed that Asia-Pacific will require 12,820 airplanes worth $1.9 trillion in the next two decades. The deliveries will account for a sizeable 36% of the global commercial airplane delivery in the aforesaid period. These deliveries will triple the size of the Asia-Pacific aircraft fleet by 2032 from 2012 levels.

Not surprisingly, Boeing is likely to be a major beneficiary of this demand explosion, as nearly 69% of the new additions will be in the single-aisle market. The emphasis being on swift, low-cost travel, Boeing with its fuel efficient single-aisle airplanes like the Next-Gen 737 and the 737 MAX will definitely secure a good many of these potential orders.

Given its impressive track record of both innovation and fuel efficiency, we expect Boeing to come out with newer variants of single-aisle aircraft, always a step ahead of its competitors.

Masimo Upgraded to Buy Rec

Zacks Investment Research has upgraded Masimo Corporation (Nasdaq:MASI-Free Report) to a Zacks Rank #2 (Buy) from a Zacks Rank #3 (Hold).

Why the Upgrade?

Masimo has been enjoying rising estimate revisions in the past 30 days with five upward estimate revisions and no downward revision for 2014. The upward estimate revisions led to a 12.1% rise in the Zacks Consensus Estimate to $1.30 per share for the year over the same timeframe.

Moreover, Masimo delivered positive earnings surprises in the last four quarters, with an average beat of 16.5%.

On Apr 30, 2014, Masimo reported first-quarter adjusted earnings of 39 cents per share, which reflected a year-over-year growth of 39.3% and comfortably beat the Zacks Consensus Estimate of 29 cents. Revenues during the first quarter (including royalties) were up 2.8% to $139.8 million but lagged the Zacks Consensus Estimate of $144.0 million.

Revenue growth was partially driven by modest improvements in product revenues, royalties and OEM sales. The company witnessed strong Masimo rainbow products revenues, which spiked 23% to $12.9 million during the quarter.

Masimo ended the quarter with a strong financial position as cash and cash equivalents were up 23.1% and capital lease obligations were down 23.2% from Dec 28, 2013.

For 2014, Masimo expects reported earnings in the range of $1.24 to $1.33. The current Zacks Consensus Estimate of $1.30 lies within the guided range.

Masimo expects revenues of $588 to $598 million for 2014, which includes Product revenues of $560 to $570 million and Royalty revenues of $28 million. Product revenue guidance includes rainbow revenues of $60 million. The current Zacks Consensus Estimate of $591 million lies within the projected range.

Masimo entered 2014 with a 10% increase in its global installed base. A robust pipeline of multiple new products coupled with continuing market share gains provides a potential upside for the company going forward.

Other Stocks to Consider

Some other medical instrument stocks include RTI Surgical Inc. (Nasdaq:RTIX-Free Report), Accuray Inc. (Nasdaq:ARAY-Free Report) and Globus Medical, Inc. (NYSE:GMED-Free Report). While RTI Surgical sports a Zacks Rank #1 (Strong Buy), Accuray and Globus Medical carry a Zacks Rank #2 (Buy).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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