One of the standouts of today's afternoon trading session has been Masimo, which logged a -4.4% drop and underperformed the S&P 500 by -4.0%. The Medical Instruments & Supplies stock is now trading at $91.22 per share and is -30.17% below its average target price of $130.63. Analysts have set target prices ranging from $110.0 to 150.0 dollars per share, and have given the stock an average rating of buy.
We can use Masimo's short interest as a proxy for determining general market sentiment regarding the stock. The short interest is the percentage of the share float that represents short positions, meaning that the investor believes the stock will decline in the future. Since MASI's short interest is 9.3%, the market sentiment is mixed on this stock.
When a stock is sold short, it means an investor has borrowed shares of the stock from their broker, and then sold them at the going market price. The investor hopes for the price to decline, so that they might buy those shares back at a lower price in the future. Once they do, they can return the borrowed shares to their broker, and keep the profit they made on the transaction.
One way to get an idea of the market sentiment on a stock is to check its rate of institutional ownership. In the case of Masimo, institutional investors own 86.2% of the shares, which indicates they have a very high stake in the company. What does this really tell us?
Institutional investors such as hedge funds, investment firms, and wealth managers devote significant resources to identifying good investments. If they have decided to invest in MASI, it probably means they believe it is a solid investment choice.
But it could also mean they are buying up shares in an effort to acquire the company or to get seats on the board of directors. Also bear in mind that institutions are fallible (just maybe not quite as fallible as the average retail investor), so they may simply be wrong when they think they've found a good stock.
Overall, there is mixed market sentiment towards Masimo because of an analyst consensus of strong upside potential, a buy rating, an above average percentage of its shares sold short, and a significant number of institutional investors. Investors should not base their decisions on market sentiment only, they should also be aware of a stock's fundamentals before committing.
At a glance, here are some essential statistics you may want to know about MASI:
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It has trailing 12 month earnings per share (EPS) of $2.07 per share
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Masimo has a trailing 12 month Price to Earnings (P/E) ratio of 44.1 while the S&P 500 average is 15.97
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The company has a Price to Book (P/B) ratio of 3.68 in contrast to the S&P 500's average ratio of 2.95
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Masimo is a Health Care company, and the sector average P/E and P/B ratios are 24.45 and 4.16 respectively
