U.S. Markets closed

IDEXX Poised on Strong Global Companion Animal Group Growth (revised)

Zacks Equity Research

On Jul 16, 2014, we initiated coverage on IDEXX  Laboratories, Inc. (IDXX) – a developer, manufacturer and distributor of products and services primarily for the companion animal veterinary, livestock and poultry, water testing and dairy markets.

IDEXX reported mixed first-quarter 2014 results with its bottom line steering ahead of the Zacks Consensus Estimate and revenues missing our expectation. Earnings per share of $0.89 were up 10%, a penny ahead of the Zacks Consensus Estimate. On the other hand, revenues of $360.2 billion increased 8% but missed the Zacks Consensus Estimate of $362 million by a whisker.

The year-over-year growth on both fronts is indicative of the company’s consistent growth via organic means. We are at the same time encouraged by the global performance of the company during the first quarter.

In addition, IDEXX is also benefiting from the go-direct strategy in its organic business. Bolstered by strong and consistent Companion Animal Group (CAG) performance in the quarter, the company raised its full year 2014 revenue outlook and expects to reach the upper end of the organic growth guidance range of 8-9% with ease.

Backed by a strong cash position, the company remains committed to delivering incremental returns to investors, thereby leveraging earnings power. In the last reported quarter, IDEXX had bought back approximately 616,000 shares for $70 million.

However, dependence on third part distributors remains an overhang. Further, intense competition and currency fluctuations warrant caution.

IDEXX currently carries a Zacks Rank #3 (Hold).

Other Stocks to Consider

Investors interested in the medical instrument sector can consider better-ranked stocks like Accuray Inc. (ARAY), Masimo Corp. (MASI) and Sirona Dental Systems Inc. (SIRO). While Accuray and Masimo Corp. sport a Zacks Rank #1 (Strong Buy), Sirona Dental carries a Zacks Rank #2 (Buy).

(We are reissuing this article to correct some mistakes. The original article, issued yesterday, July 17, 2014, should no longer be relied upon.)

Read the Full Research Report on IDXX
Read the Full Research Report on ARAY
Read the Full Research Report on MASI
Read the Full Research Report on SIRO

Zacks Investment Research