Masimo Shares Under Pressure Ahead of Earnings Report

Masimo Corporation shares are navigating challenging market conditions, with a distinct downward trend emerging in recent trading sessions. The medical technology company's stock has declined approximately 13% over the past three months, including a 0.6% drop during October that brought shares to $140.65 as of October 31. This persistent weakness is prompting investors to reassess the company's future outlook.

The upcoming quarterly report, scheduled for release after market close on Tuesday, represents a pivotal moment for Masimo. Market expectations present a mixed picture: while earnings per share are projected between $1.19 and $1.20, revenue is anticipated to plummet by 27.3% to $366.8 million for Q3 2025. Such a substantial revenue contraction underscores the significance of this earnings announcement.

Technical Indicators Flash Warning Signs

Chart analysis reveals concerning technical patterns for Masimo equity. Multiple moving averages are generating sell signals, and since reaching its peak on October 8, the stock has already surrendered 8.5% of its value. The resistance level at $194.88—the 52-week high—appears distant, while the lower boundary of $133.70 is approaching uncomfortably close.

Key performance metrics:
* Current price: $140.65 (as of October 31)
* Quarterly performance: Down 13%
* Year-to-date performance: 2.5% decline
* Trading range: $133.70 to $194.88

Market participants are questioning whether the stock can arrest its downward trajectory or if the decline will continue toward annual lows.

Should investors sell immediately? Or is it worth buying Masimo?

Institutional Confidence Defies Market Sentiment

Despite the negative price action, an interesting divergence has emerged between investor categories. While retail investors are reducing exposure, major institutions are maintaining significant positions. Institutional ownership remains substantial at 86% of outstanding shares. Recent regulatory filings show Strs Ohio added 15,848 shares, while T. Rowe Price Associates significantly increased its position by 49.4% during the second quarter. BlackRock also expanded its holdings by 6.4%.

Even more surprising, some market observers consider the stock substantially undervalued. Fair value estimates reach $187.57 per share—approximately 25% above current trading levels. Wall Street analysts echo this perspective with a median price target of $182.50, suggesting potential upside of 22.4%. Among seven covering analysts, the majority recommend buying shares, with only two advising investors to maintain existing positions.

Profitability Strength Contrasts With Revenue Concerns

The company's previous quarterly results delivered positive news, with earnings per share of $1.33 exceeding expectations of $1.22. Revenue increased 7.7% to $370.9 million during that period. However, the current quarter's projected 27.3% revenue decline threatens to undermine this positive momentum.

Despite reporting a negative net margin of 24.85%, Masimo demonstrates robust return on equity of 26.54%. For the full fiscal year, market experts project EPS of $4.1, indicating anticipated profitability improvements. The crucial question remains whether these positive fundamentals can overcome the current downward trend in shareholder value.