IDEXX Laboratories, Inc. IDXX is well poised for growth backed by solid fundamentals in the companion animal market. The company's innovation-based multi-modality global strategy, supported by enhanced commercial capability, is driving Companion Animal Group (CAG) Diagnostics revenues.
In the past year, the company’s shares have outperformed the industry. The stock has gained 22.5% compared with the industry’s 2.9% dip and the S&P 500’s 3.1% increase.
This leading developer, manufacturer and distributer of products and services, primarily for the companion animal veterinary, livestock and poultry, water testing and dairy markets, has a market cap of $21.23 billion.
Considering the solid prospects, this Zacks Rank #2 (Buy) stock is an attractive pick for investors at the moment.
What’s Driving the Stock?
Strong International Performance: IDEXX continues to demonstrate impressive growth with solid international expansion. International revenues in the first quarter of 2019 registered double-digit increase, courtesy of strong organic gains in CAG Diagnostics recurring revenues. This includes significant organic growth in consumable revenues as the company is benefitting from 30% year-on-year growth in global catalyst install base outside the United States. International reference lab growth was in the mid-single digit. In the first quarter, the company distributed 1,463 Catalyst instruments globally, including 633 placements at new and competitive accounts in international regions, up 20% year over year.
CAG Continues to Perform Well: IDEXX generates a significant chunk of its revenues from the Companion Animal Group segment. In the last reported quarter, the CAG segment performed impressively, driven by strong CAG Diagnostics recurring organic revenue growth, high premium CAG instrument placements as well as continued solid growth in software, services and diagnostic imaging system businesses. The CAG Diagnostic recurring revenues have registered increase in the United States and internationally.
Of late, IDEXX is steadily expanding the test menu. In the last reported quarter, the company launched catalysts progesterone, which is off to a strong start globally. This apart, it has registered strong placements of its newly-launched Cornerstone, Neo, Animana and Smart Flow systems in the quarter.Apart from the United States and Canada, IDEXX expects to launch the Catalyst SDMA Test in other parts of the world over the next months. The company also announced a global agreement with Applied BioCode — a diagnostic company to bring Reference Laboratories customers the digital multiplex platform built by Applied BioCode. Management stated that it aims to commercially launch the technology in 2019.
Strong cash position: IDEXX exited the first quarter with cash and cash equivalents of $116.6 million compared with $123.8 million at the end of 2018. At the end of the quarter, net cash provided by operating activities was $34.4 million compared with $34.9 million in the year-ago quarter. A strong cash position indicates promising returns to shareholders of IDEXX.
Which Way Are Estimates Heading?
For the second quarter of 2019, the Zacks Consensus Estimate for earnings is pegged at $1.36, indicating 10.8% growth from the year-ago quarter’s figure. The same for revenues is pegged at $627.9 million, calling for year-over-year improvement of 8.1% from the prior-year quarter’s number.
For 2019, the Zacks Consensus Estimate for earnings is at $4.82, suggesting 13% year-over-year growth from the year-earlier figure. The same for revenues is pegged at $2.41 billion, suggesting 8.9% rise from the prior-year quarter’s number.
Other Key Picks
Some other top-ranked stocks in the broader medical space are Cerner Corporation CERN, Penumbra PEN and Bruker Corporation BRKR. While Cerner sports a Zacks Rank #1 (Strong Buy), Penumbra and Bruker carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cerner’s long-term earnings growth rate is expected to be 13.5%.
Penumbra’s long-term earnings growth rate is projected at 21.5%.
Bruker’s long-term earnings growth rate is estimated at 11.7%.
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