HPT vs. HCP: Which Stock Should Value Investors Buy Now?
Shares of Bio-Rad Laboratories, Inc. BIO have gained 13.5% since the release of first-quarter 2018 results on May 8.
The upside can be attributed to better-than-expected earnings per share (EPS) and revenue growth across product lines along with strong performance in all geographies. Over the past month, the stock has gained 13.5%, outperforming the industry’s rise of 5.5%.
Let’s delve into the factors.
The company posted adjusted EPS of $1.17, which surpassed the Zacks Consensus Estimate by 30%. Earnings surged 72.1% from the prior-year quarter’s tally.
Revenues in Detail
Revenues in the first quarter totaled $551.5 million, outpacing the Zacks Consensus Estimate by 4.1%. Revenues improved 10.3% from the year-ago quarter’s figure and rose 4.5% at constant currency (cc).
Per management, the total figure includes approximately $6 million of recorded sales associated with the settlement of a royalty dispute in Diagnostics segment. It also comprises $6 million of RainDance sales, up from sales of $2 million recorded in the prior-year quarter.
Geographically, sales in the quarter grew primarily in North America, China and Asia Pacific, marginally offset by sluggish sales in Europe.
Bio-Rad Laboratories, Inc. Price, Consensus and EPS Surprise
Bio-Rad Laboratories, Inc. Price, Consensus and EPS Surprise | Bio-Rad Laboratories, Inc. Quote
Sales in the Life Sciences segment posted first-quarter sales of $197.8 million, up 13.5%, year over year. The segment’s revenues climbed 8.9% at cc. Per management, the upside reflects growth in sales of Droplet Digital PCR, process chromatography and cell biology product lines.
On a geographic basis, sales were particularly strong in North America, China and Europe at cc.
Net sales in the Clinical Diagnostics in the first quarter were $350.8 million, up 8.9% on a year-over-year basis and 2.4% at cc. The upside indicates growth in immunology, diabetes and quality control product lines.
Geographically, sales rose in North America and Asia Pacific.
Gross profit in the reported quarter raked in $302.2 million, up 11.9% from the prior-year quarter’s tally. Gross margin came in at 55.7%, which contracted 130 basis points (bps).
Operating income grossed at $43.6 million, up significantly by 66.5%. Operating margin came in at 9.7%, which expanded 230 bps.
For full year 2018, the company projects revenue growth of approximately 3.5-4.0% at cc.
Full-year gross margins are expected between 55.5% and 56%. Operating margins are projected at 10%.
Bio-Rad delivered stellar first-quarter results, with earnings and revenues surpassing the consensus mark and the Clinical Diagnostics segment delivering impressive sales. Strong growth across the Life Science segment also holds promise. The company also witnessed growth in its diabetes and autoimmune product lines. Meanwhile, solid growth in geographies like North America, China and Asia Pacific indicates the company’s strong international foothold. Improvement in operating income and margins is a major positive.
However, a decline in gross profit is a concern. The company witnessed some softness in Europe in the first quarter.
Zacks Rank & Key Picks
Bio-Rad currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are Abiomed, Inc. ABMD, Genomic Health Inc. GHDX and Varian Medical Systems, Inc. VAR.
Abiomed has a long-term earnings growth rate of 27%. The stock sports a Zacks Rank #1 (Strong Buy). You can see see the complete list of today’s Zacks #1 Rank stocks here.
Genomic Health has an expected earnings growth rate of 187.5% and a Zacks Rank #1.
Varian Medical has a projected long-term earnings growth rate of 8%. The stock carries a Zacks Rank #2 (Buy).
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