U.S. Markets closed

Here's Why You Should Retain Bio-Rad (BIO) Stock for Now

Zacks Equity Research

Bio-Rad Laboratories, Inc. BIO is well poised for growth backed by robust segmental performance and solid prospects within the blood typing market.

In the past year, the company’s shares have outperformed the industry. The stock has gained 7.2% compared with the industry’s 3% rise.

The company has a market cap of $10.12 billion.

Courtesy of solid prospects, this Zacks Rank #3 (Hold) stock is worth holding on to for now.

What’s Driving the Stock?

Focus on International Markets: Recently, Bio-Rad has been deriving more than 60% of its net sales from international markets. The company considers Europe as the largest international market.  Each of the key product segments of the company has registered overall growth across major geographies of Europe, EMEA and Asia.

 

Impressive Segmental Growth: Bio-Rad witnessed constant-currency sales growth across all channels in the second quarter.Currency-neutral revenue growth in the Life Sciences segment reflects robust sales in the cell biology, droplet Digital PCR and food safety product lines.Within the Clinical Diagnostics segment, the upside in the currency neutral sales was driven by growth in Quality Controls, Immunology and Diabetes product lines across all three geographies. During the second quarter, the company received a long-awaited FDA approval for its BioPlex Lyme disease panel.

Solid Prospects in Blood Typing Market: The company’s performance in the Blood typing market continues to be robust in the second quarter. New product adoption in the United States is impressive courtesy of the recent 510(k) clearance of the IH-Reader 24. It is a semi-automated blood typing instrument designed for medium- to small-volume laboratories. Following FDA’s approval of the IH500 in April 2019, the company is anticipating further growth in the segment. During the second quarter, the company continued to see strong global market adoption of IH-1000 and IH-500.

Downsides

However, there are a few factors that are impeding the company’s growth lately.

Tough Competitive Pressure:  Bio-Rad operates in a highly-competitive environment, which is dominated by several multi-national corporations. In the Life Science segment, the company primarily competes with Becton Dickinson, GE Biosciences, Merck Millipore and Thermo Fisher Scientific. Again, some prominent competitors in the Clinical Diagnostics segment are Roche, Abbott Laboratories, Siemens, Danaher, Thermo Fisher, Becton Dickinson and DiaSorin.

Reduced Reimbursement Rates: Bio-Rad’s Clinical Diagnostics business is exposed to changing reimbursement rates for clinical tests from third-party payors like Medicare and Medicaid in the United States. Payment for several diagnostic tests furnished to Medicare fee-for-service beneficiaries is dependent on the Medicare Clinical Laboratory Fee Schedule (CLFS).

Which Way are Estimates Heading?

For the third quarter of 2019, the Zacks Consensus Estimate for earnings is pegged at $1.43, which indicates 57.1% surge from the year-ago quarter’s figure. The same for revenues is pegged at $564.1 million, which calls for year-over-year rise of 3.5% from the prior-year quarter’s number.

For 2019, the Zacks Consensus Estimate for earnings is pegged at $7.19, which suggests 23.1% year-over-year rise. The same for revenues is pegged at $2.34 billion, which suggests 2.3% rise from the prior-year quarter’s number.

Key Picks

A few better-ranked stocks in the broader medical space are Medtronic MDT, Baxter BAX and Amedisys AMED, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Medtronic’s long-term earnings growth rate is expected at 7.13%.

Baxter’s long-term earnings growth rate is projected at 12.8%.

Amedisys’ long-term earnings growth rate is expected to be 16.3%.

Wall Street’s Next Amazon

 Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.

Click for details >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Medtronic PLC (MDT) : Free Stock Analysis Report
 
Bio-Rad Laboratories, Inc. (BIO) : Free Stock Analysis Report
 
Baxter International Inc. (BAX) : Free Stock Analysis Report
 
Amedisys, Inc. (AMED) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research