Why $MASI may be heading for a nice bounce off support and could be worth a look

Why $MASI may be heading for a nice bounce off support 1. The chart is extremely oversold The drop was not normal due to the float dynamic discussed below. The steep drop left MASI at RSI levels that tend to bounce very well in the near term. Check the key levels - the daily, 4 hour, and 1 hour chart RSI. -Daily RSI at 19 -4 Hour RSI at 14 -1 Hour RSI at 16 When you see this combination of RSI levels, you can almost always predict quite a recovery bounce the next day, especially when the overall company numbers are this good (see below) 2. Institutions and insiders own the float, making it a very low free float stock that move up easily. -BlackRock, Vanguard, and the company CEO collectively own 33%+ of the float. The institutions that own it are very high quality companies that can easily move the price up by buying it up at the lows. -The total float is roughly 96-98% owned by institutions ​ https://preview.redd.it/wj8o834twai81.png?width=512&format=png&auto=webp&s=cd97bcef3321a2fff5b214edb56eeb5acfcd9778 https://preview.redd.it/5aw2604twai81.png?width=512&format=png&auto=webp&s=9aa103ecfc9c3f6bd79b34fec016ac1db800b154 https://preview.redd.it/kj7tv14twai81.png?width=512&format=png&auto=webp&s=10e5b4c62626b2cf34abc00c16f3f72632f158d6 3. The chart supports a bounce. The price hasn’t been this low in years. You need to pull up the 3 year chart to find this low, and there is very strong support right where the price is now. In fact, the last time it dropped to this level it bounced over $175 shortly afterwards, and then well above $200 soon thereafter. That was when $MASI was making much lower revenue than they are now. (*see chart below or look for yourself) ​ https://preview.redd.it/8gtgmw9swai81.png?width=512&format=png&auto=webp&s=9af6b8bb95ab7a8a7d38e8391dce853b18f9f7ee 4. The earnings numbers and the growth is good. -Promisingly, Masimo reported in-line fourth-quarter sales of $327.6 million, up 11% on a reported basis. Adjusted earnings were $1.21 per share, above Masimo stock analysts' call for $1.10 -Masimo also retained its 2022 revenue guidance for $1.35 billion, implying constant-currency growth of 9.5%. The company also expects to earn $4.34 per share. 6. There is a large gap to fill. This drop was too steep for the numbers they are putting up and the combined technicals and fundamentals here will lead to quite a gap fill. At least a partial fill to $175 should come very soon. ​ https://preview.redd.it/mdf4qderwai81.png?width=512&format=png&auto=webp&s=12bb44f67ae6e436e795224f885a66ac3814e7bd 7. The target they are acquiring brought in $900 million in sales already last year and the buyout will be immediately accretive to earnings according to the CEO. -The CEO says "We see significant opportunities to cross-leverage technologies, bringing Masimo's clinically superior solutions into the home and on-the-go as well as bringing Sound United's premium technologies into the hospital to advance our hospital automation connectivity and cloud-based technologies." ​ Disclosure. I am long roughly 1300 shares-Please see image below. This was an end of day dip buy based on the information in this post ​ Position

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Why $MASI may be heading for a nice bounce off support and could be worth a look

bullish

Why $MASI may be heading for a nice bounce off support

1. The chart is extremely oversold

The drop was not normal due to the float dynamic discussed below. The steep drop left MASI at RSI levels that tend to bounce very well in the near term. Check the key levels - the daily, 4 hour, and 1 hour chart RSI.

-Daily RSI at 19

-4 Hour RSI at 14

-1 Hour RSI at 16

When you see this combination of RSI levels, you can almost always predict quite a recovery bounce the next day, especially when the overall company numbers are this good (see below)

2. Institutions and insiders own the float, making it a very low free float stock that move up easily.

-BlackRock, Vanguard, and the company CEO collectively own 33%+ of the float. The institutions that own it are very high quality companies that can easily move the price up by buying it up at the lows.

-The total float is roughly 96-98% owned by institutions







3. The chart supports a bounce.

The price hasn't been this low in years. You need to pull up the 3 year chart to find this low, and there is very strong support right where the price is now. In fact, the last time it dropped to this level it bounced over $175 shortly afterwards, and then well above $200 soon thereafter. That was when $MASI was making much lower revenue than they are now. (*see chart below or look for yourself)



4. The earnings numbers and the growth is good.

-Promisingly, Masimo reported in-line fourth-quarter sales of $327.6 million, up 11% on a reported basis. Adjusted earnings were $1.21 per share, above Masimo stock analysts' call for $1.10

-Masimo also retained its 2022 revenue guidance for $1.35 billion, implying constant-currency growth of 9.5%. The company also expects to earn $4.34 per share.

6. There is a large gap to fill.

This drop was too steep for the numbers they are putting up and the combined technicals and fundamentals here will lead to quite a gap fill. At least a partial fill to $175 should come very soon.



7. The target they are acquiring brought in $900 million in sales already last year and the buyout will be immediately accretive to earnings according to the CEO.

-The CEO says "We see significant opportunities to cross-leverage technologies, bringing Masimo's clinically superior solutions into the home and on-the-go as well as bringing Sound United's premium technologies into the hospital to advance our hospital automation connectivity and cloud-based technologies."

Disclosure. I am long roughly 1300 shares-Please see image below. This was an end of day dip buy based on the information in this post

Position

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170.00
Target Price
6/ 10
Confidence
2-6 Months
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