The thesis

Merit Medical Systems designs and manufactures disposable medical products for cardiology procedures. The company has a gross margin of 49.52% and revenue growth of 9.7% year-over-year. With a conviction score of 38/100, the setup is interesting due to the disconnect between the analyst consensus rating of BUY and the company's valuation. The P/E ratio of 35.1x and net margin of 9.22% warrant closer examination.

Why now

The current macro context, including China's chip tool push and the US-China squeeze, may impact MMSI's supply chain and profitability. The recent decline in America's oil reserves to a 43-year low amidst a Middle East war may also affect the company's operations and revenue growth.

What to watch

Investors should watch MMSI's revenue growth and gross margin over the next 1-3 quarters to confirm or deny the thesis. The company's ability to navigate the current macro context and maintain its profitability will be crucial in determining its future performance.

Key risks

Valuation risk is a concern due to MMSI's high P/E ratio, which may not be justified by its revenue growth. Execution risk is also a factor, as the company's ability to maintain its gross margin and net margin is crucial to its profitability. Additionally, macro risk from the US-China trade tensions and global economic uncertainty may impact MMSI's business.

Upcoming catalysts