It has been about a month since the last earnings report for Qiagen (QGEN). Shares have added about 4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Qiagen due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
QIAGEN Molecular Diagnostics Unit Grows Strong n Q1
QIAGEN's first-quarter 2019 adjusted earnings per share (EPS) came in at 27 cents, beating the Zacks Consensus Estimate and up 3.8% from the year-ago figure. At constant exchange rate or CER, the quarter’s adjusted earnings per share came in at 28 cents.
Revenues in Detail
Net sales at actual rates in the first quarter inched up 1.5% on a year-over-year basis to $348.7 million (up 6.1% at CER). However, the top line missed the Zacks Consensus Estimate by 0.7%.
Geographical Revenue Update
In the quarter under review, sales from the Americas (49% of revenues) totaled $170 million, up 7% on a reported basis (up 8% at CER). Revenues from Europe-Middle East-Africa (31% of revenues) declined 6% reportedly (up 4% at CER) to $109 million. Further, revenues from Asia-Pacific/Japan (20% of revenues) rose 2% year over year on a reported basis (up 6% at CER) to $69 million.
As of the first quarter of 2019, QIAGEN has two major customer classes which are Molecular Diagnostics (that includes human healthcare including Precision Medicine and companion diagnostics) and Life Sciences (that includes Pharma and Academia/Applied Testing).
Molecular diagnostics (representing 48% of net sales) revenues were up 10% at CER to $168million.
Life Sciences (52% of total revenues) reported revenues of $181 million, up 3% at CER. Sales derived from Applied Testing/Academia rose 2% at CER to $110 million. Pharma sales climbed 4% at CER in the first quarter to $71 million.
Gross profit in the quarter under review declined 0.4% to $224.8 million. Gross margin contracted 120 basis points (bps) to 64.5%.
Adjusted operating income (excluding items like acquisition-related intangible amortization) declined 13.2% year over year to $504.8 million in the first quarter. Adjusted operating margin contracted 244 bps to 14.5%.
QIAGEN exited the first quarter of 2019 with cash and cash equivalents of $552.9 million, down from $1.16 billion at the end of 2018. Net cash provided by operating activities at the end of the quarter was $44.7 million compared with $48.2 million a year ago. Moreover, the company reported free cash flow of $21.3 million at the end of the reported quarter compared with $29.3 million a year ago.
QIAGEN announced plans to launch a $100-million share repurchase program following the completion of its existing $200-million repurchase plan. As of Apr 30, 2019, the company bought back a total of 4.1 million shares for $150 million under this existing $200-million buy-back plan.
QIAGEN has reaffirmed its 2019 guidance. Total net sales growth is expected in the range of about 7-8% at CER on strong portfolio expansion with about $30 million of contributions from QIAstat-Dx. The Zacks Consensus Estimate for 2019 revenues is pegged at $1.60 billion.
Adjusted EPS guidance for the full year is reiterated in the band of $1.45-1.47 at CER. The Zacks Consensus Estimate for 2019 EPS is pegged at $1.46, within the guided range.
The company also issued the financial projection for the second quarter of 2019. Net sales are envisioned to grow around 5% at CER. Adjusted EPS is predicted within 33-34 cents at CER on an underlying basis. The Zacks Consensus Estimate for earnings stands at 36 cents, above the high end of the guided range. Our consensus estimate for revenues is pegged at $398.8 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -7.11% due to these changes.
At this time, Qiagen has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Qiagen has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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