Here's Why You Should Add QIAGEN (QGEN) to Your Portfolio
QIAGEN N.V. QGEN has been gaining on robust segmental growth. Its international performance has also been impressive. Its strong revenues in the first quarter of 2020 buoy optimism. However, downsides may result from its reliance on commercial relationships and a stiff competitive landscape.
Over the past six months, the Zacks Rank #1 (Strong Buy) stock has outperformed its industry. The stock has gained 38.8% compared with 9.7% growth of the industry and 1.9% fall of the S&P 500.
The renowned molecular diagnostics solutions provider has a market capitalization of $11.03 billion. The company projects 22.3% growth for the next five years and expects to maintain strong segmental performance. The company surpassed estimates in two of the trailing four quarters and missed estimates in the other two, the average positive surprise being 1.54%.
Let’s delve deeper.
Sell-off Deal to Thermo Fisher Looks Strategic: We are upbeat about the sell-off deal of QIAGEN with Thermo Fisher Scientific Inc. TMO. Post integration, QIAGEN’s molecular diagnostics presence with focus on infectious disease testing will complement Thermo Fisher’s existing specialty diagnostics capabilities. The consolidated business is anticipated to provide advanced higher-specificity and more comprehensive tests in a faster way at reduced cost.
Further, QIAGEN’s assay and bioinformatics technologies will complement the genetic analysis and biosciences capabilities of the former. This expanded line will significantly boost Thermo Fisher’s research capabilities in life science.
Huge Potential in Molecular Diagnostics: We are optimistic about the strong performance of QIAGEN’s molecular diagnostic portfolio. The company registered strong sales growth of the QIAsymphony automation system, the QIAcube Connect sample processing instrument and the QIAstat-Dx syndromic testing instrument in the first quarter of 2020.
QIAGEN’s key strategic collaborations with Hamilton Robotics and Tecan for the pre-analytical handling of blood tubes also buoy optimism. The company has continued to gain traction from its collaboration with DiaSorin for the readout of test results on their LIAISON platform.
Impressive Q1 Results: QIAGEN’s strong revenues in the first quarter of 2020 instill optimism. Its revenue growth across all geographies and each of its operating segments in the first quarter is impressive. Robust instrument sales were registered for QIAsymphony, QIAcube Connect and QIAstat-Dx. Expansion in operating margin is encouraging as well.
Responding to the coronavirus pandemic, it scaled up RNA extraction kit and instrument production and launched QIAstat-Dx Respiratory SARS-CoV-2 Panel to speed up virus detection.
However, downsides might result from the company’s reliance on commercial relationships. The future level of sales for companion diagnostics depends to a high degree on the commercial success of the related medicines for which the tests have been designed. Further, risks remain that it may be unable to maintain these relationships and its collaborative partners may pursue or develop competing products or technologies, either on their own or in collaboration with others.
Further, QIAGEN is facing intensifying competition from firms providing pre-analytical solutions and other products used by QIAGEN’s customers. The markets for some of the company’s products are very competitive and price sensitive as well.
Estimate Trend
QIAGEN has been witnessing a positive estimate revision trend for 2020. Over the past 90 days, the Zacks Consensus Estimate for its earnings has moved 36.2% north to $1.88.
The Zacks Consensus Estimate for second-quarter 2020 revenues is pegged at $443 million, suggesting a 16.1% rise from the year-ago reported number.
Other Key Picks
A few other top-ranked stocks from the broader medical space are Quest Diagnostics Incorporated DGX and Laboratory Corporation of America Holdings LH or LabCorp.
Quest Diagnostics’ long-term earnings growth rate is projected at 13.2%. It currently flaunts a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
LabCorp’s long-term earnings growth rate is estimated at 7.5%. The company presently sports a Zacks Rank #1.
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Quest Diagnostics Incorporated (DGX) : Free Stock Analysis Report
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