IDEXX Laboratories: Q1 Placements Impress, Yet View Down - Analyst Blog
On May 6, 2015, we issued an updated research report on IDEXX Laboratories, Inc. IDXX– a leading pet healthcare innovation company with an integrated portfolio of diagnostic and information technology-based products and services.
IDEXX delivered disappointing first-quarter 2015 results with both its top and bottom line missing the Zacks Consensus Estimate. The company’s 2015 guidance cut also raises caution.
Nevertheless, on a year-over-year basis, the company achieved positive top-line growth and witnessed solid improvement in instrument placements in both the U.S. and overseas markets despite facing strong foreign exchange headwinds.
Presently, we are positive on the company’s strong performance in the international space. In the reported quarter, IDEXX witnessed strong growth in Europe, Asia-Pacific and North America, most significantly from Canada, the U.K., China and Italy; with 11% growth in normalized CAG diagnostic recurring revenues.
In addition, the company’s largest segment – Companion Animal Group (CAG) continued to deliver consistent performance in the reported quarter as well, driven by constant strong gains observed in instrument consumable and reference lab sales. IDEXX currently remains on track for strong normalized organic growth of 12% to 13%, including 14% to 15% CAG Diagnostics recurring revenues growth.
On the flip side, we are wary of the foreign currency fluctuation that management anticipates will affect IDEXX’s overseas business in the near term, while intense competition in the CAG space as well as high dependence on third party distributors continues to be a major overhang.
Currently, the Zacks Consensus Estimate for 2015 and 2016 stands at $1.17 and $4.18 per share, respectively.
The stock currently holds a Zacks Rank #3 (Hold).
Key Picks from the Sector
Medical Instrument stocks such IRadimed Corporation IRMD, RTI Surgical Inc. RTIX and Cepheid CPHD are worth a look. While IRadimed and RTI Surgical sport a Zacks Rank #1 (Strong Buy), Cepheid carries a Zacks Rank #2 (Buy).
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