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IDEXX (IDXX) Gains Traction From Solid CAG, Global Strength

Zacks Equity Research

On Jun 20, we issued an updated research report on IDEXX Laboratories, Inc. IDXX. The company’s robust worldwide commercial capabilities and best-in-class products including the next-generation chemistry analyzer, Catalyst One, are key growth drivers over the near term. The stock carries a Zacks Rank #2 (Buy).

Over the past three months, this leading molecular diagnostic company has outperformed its industry. The stock has rallied 21.6% versus the 4.3% dip of the industry.

IDEXX continues to demonstrate strong organic growth, driven by robust sales at the Companion Animal Group (CAG) business, fueled by a firm global Catalyst uptake. Solid growth in organic revenues and a raised 2019 EPS guidance are also encouraging. Further, the company witnessed strong gains in CAG (Companion Animal Group) Diagnostics recurring revenues as well as in global premium instrument installed base in the last reported quarter.

IDEXX Laboratories, Inc. Price

IDEXX Laboratories, Inc. Price

IDEXX Laboratories, Inc. price | IDEXX Laboratories, Inc. Quote

The companion animal market fundamentals remain solid with a tremendous global runway for growth. This innovation-based, multi-modality global strategy, enabled by an enhanced commercial capability, accelerated recurring CAG Diagnostics revenue growth.

International revenues in the first quarter of 2019 were up 11% organically, driven by 14% organic gains in CAG Diagnostics recurring revenues. This includes more than 20% organic growth in consumable revenues as the company is benefiting from 30% year-over-year growth in global catalyst install base outside the United States.

Additionally, the company boasts a strong cash balance, allowing it to carry out share repurchases.

Meanwhile, a majority of IDEXX’s consolidated revenues is being derived from the sale of products in the international markets. Thus, the strengthening of the U.S. dollar’s exchange rate, relative to other currencies, left a negative impact on the revenues derived in currencies other than the U.S. money as well as on profits drawn from products manufactured in the United States and sold internationally. Also, the company’s heavy dependence on third-party distributors is a drag.

Other Key Picks

Some other top-ranked stocks in the broader medical space are Cerner Corporation CERN, Penumbra PEN and Bruker Corporation BRKR, each stock carrying a Zacks Rank of 2.

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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