It has been about a month since the last earnings report for Bio-Rad Laboratories (BIO). Shares have lost about 0.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Bio-Rad due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Bio-Rad posted second-quarter 2018 adjusted earnings per share (EPS) of $1.64, which surpassed the Zacks Consensus Estimate of $1.35. Earnings surged 182.8% from the prior-year quarter.
Revenues in Detail
Revenues in the quarter totaled $575.9 million, beating the Zacks Consensus Estimate by 4.5%. Revenues improved 14.1% from the year-ago quarter and rose 11% at constant currency (cc).
Per management, solid demand across many of its key product lines led to double-digit growth in all three major geographies.
Sales in the Life Sciences segment totaled $217.8 million, up 21.4% year over year and 18.9% at cc. Per management, the upside reflects growth in sales of cell biology, Digital PCR and food safety product lines. Further, the company continues to see increased demand for its process media product lines.
On a geographic basis, sales at cc were particularly strong in the United States, Europe and Asia, with a chunk coming from China.
Net sales at the Clinical Diagnostics in the second quarter were $354 million, up 9.9% on a year-over-year basis and 6.5% at cc. The upside indicates growth in immunology, blood typing and quality-control product lines.
Per management, the impressive performance of the Clinical Diagnostics business was backed by a considerable rise in instrument placements for the blood typing market with unit volume more than doubling both sequentially and year over year.
Geographically, sales rose in the Americas, China and Europe.
Gross profit in the reported quarter totaled $301.7 million, up 10.4% from the prior-year quarter. Gross margin came in at 52.4%, down 180 basis points (bps). Per the company, changes in product mix toward higher instrument placements and costs related to the ongoing transition of European operations led to the decline in gross margin.
Adjusted gross margin came in at 53.4%, down 220 bps year over year.
Operating income grossed $43.8 million against operating loss of $1.7 million in the year-ago quarter.
For 2018, the company now projects revenue growth of approximately 4.0-4.5% compared with the previous range of 3.5-4.0% at cc. The Zacks Consensus Estimate for the same is pegged at $2.30 billion.
Full-year gross margin is still expected between 55.5% and 56%. Operating margin is projected at around 10%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -20.93% due to these changes.
At this time, Bio-Rad has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Bio-Rad has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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