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Bio-Rad (BIO) Down 6.9% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research
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It has been about a month since the last earnings report for Bio-Rad Laboratories (BIO). Shares have lost about 6.9% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Bio-Rad Q1 Earnings Beat Estimates, Margins Expand

Bio-Rad Laboratories posted first-quarter 2019 adjusted earnings per share (EPS) of $1.65, which beat the Zacks Consensus Estimate by 47.3%. The bottom line also soared 41% from the prior-year quarter.

Reported EPS in the quarter was $28.74, compared with $21.77 a year ago.

Revenues in Detail

Revenues in the quarter totaled $554 million, beating the Zacks Consensus Estimate by 0.9%. Revenues rose 0.5% from the year-ago quarter (up 4% at constant currency or cc).

Per management, solid demand across many of its key product lines led to growth across most geographical regions.

Segmental Analysis

Sales at the Life Sciences segment in the first quarter totaled $215.7 million, up 9.1% year over year and 12% at cc. Per management, the upside reflects higher sales in the cell biology, droplet Digital PCR, food safety, and process media products. On a geographic basis, sales were particularly strong in the Americas.

Net sales at Clinical Diagnostics totaled $334.1 million, down 4.8% on a year-over-year basis. However, sales were down less than 1% cc. The upside in the currency neutral sales was driven by autoimmune and blood typing products. Sales during the first quarter of 2019 rose in the Americas, offset by weakness in Asia Pacific and parts of Europe.

Margins

Gross profit in the reported quarter totaled $311.8 million, up 3.2% from the prior-year quarter. Gross margin came in at 56.3%, showing expansion of 148 basis points (bps). Operating margin came in at 10.2%, up 230 bps.

2019 Guidance Reaffirmed

For 2019, the company has reaffirmed its revenue growth guidance at 4-4.5% (cc). The Zacks Consensus Estimate for the same is pegged at $2.36 billion.

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 -24.6% due to these changes.

VGM Scores

Currently, Bio-Rad has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

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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