Masimo (MASI) has the potential to significantly impact Apple‘s (AAPL) annual sales, with estimates suggesting a potential loss of $100 million. This comes after MASI stock experienced a surge following a successful patent battle against the tech giant.
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The U.S. International Trade Commission has determined that Apple violated patent laws by incorporating Masimo’s pulse oximetry technology into its Apple Watch. This technology allows for the noninvasive measurement of oxygen saturation in the blood.
“This ruling sends a strong message that even the largest company in the world must adhere to the law,” said Masimo Chief Executive Joe Kiani. “It is a validation of our efforts to hold Apple accountable for unlawfully using our patented technology.”
Following the ruling, MASI stock experienced a 2.1% increase, closing the regular session at 82.58. Apple stock also saw a 0.8% rise, reaching 168.22.
MASI Stock: Potential Sales Boost
Masimo specializes in manufacturing pulse oximeters for hospital use. These devices are based on their “signal extraction technology” known as SET. Analysts predict that Masimo’s SET sales for the third quarter will witness a year-over-year decline of 4.5% to $276 million.
However, there may be positive developments on the horizon, according to Needham analyst Mike Matson.
The commissioners have issued an exclusion order for Apple’s devices that utilize Masimo’s technology. This order would temporarily prevent these devices from entering the U.S. for 60 days and allow further review by the Biden Administration. Apple is expected to appeal this decision, thereby delaying the impact of the exclusion order.
“If Masimo is successful, Apple may be required to pay royalties if it cannot modify the Apple Watch to avoid infringement,” Matson stated in a report. “We estimate that these royalties could amount to $1 to $2 per Apple Watch, resulting in $50 million to $100 million in annual revenue or 65 cents to $1.30 in earnings per share based on projected annual sales of 50 million Apple Watch units.”
Matson reaffirmed his buy rating on MASI stock, along with a price target of 136.
Stay updated with Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
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