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QIAGEN (QGEN) Beats Earnings, Revenue Estimates in Q1

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QIAGEN N.V.'s QGEN first-quarter 2018 adjusted earnings per share (EPS) came in at 26 cents, up 18.2% year over year. The figure beat the Zacks Consensus Estimate of 24 cents. At constant exchange rate or CER, the company reported adjusted earnings of 25 cents.

Revenues in Detail

Net sales at actual rates in the first quarter grew 11.7% on a year-over-year basis to $343.6 million (6% at CER). Also, the top line surpassed the Zacks Consensus Estimate of $340 million.

Region-wise, sales from the Americas (46% of revenues) grew 11% at CER, while revenues from Europe-Middle East-Africa (34%) increased 4%. Further, revenues from Asia-Pacific/Japan (20%) rose 2% year over year, after excluding business portfolio changes. Sales in the top seven emerging markets (13%) exhibited growth of 1% year over year at CER in the quarter under review.

QIAGEN N.V. Price, Consensus and EPS Surprise

QIAGEN N.V. Price, Consensus and EPS Surprise | QIAGEN N.V. Quote

Segments in Detail

QIAGEN primarily generates revenues through Molecular Diagnostics, Applied Testing, Pharma and Academia, which represented 47%, 9%, 21% and 23% of net sales, respectively, during the reported quarter.

Molecular diagnostics sales were up 9% at CER. Sales derived from Applied Testing remained flat at CER. Pharma sales rose 8% at CER in the first quarter and Academia sales improved 3% on growing demand.

Operational Update

Adjusted operating income (excluding restructuring charges) increased 21% year over year to $77.2 million in the first quarter. Also, adjusted operating margin expanded 180 basis points to 22.5%. 

Financial Update

QIAGEN exited first quarter with cash and cash equivalents of $814.9 million, up from $657.7 million at the end of 2017. Net cash from operating activities in the reported quarter was $48.2 million, down from $60.2 million in the year-ago quarter. Moreover, the company reported first-quarter 2018 free cash flow of $29.3 million compared with $44.2 million in the year-ago quarter.

QIAGEN announced a new commitment in January to return $200 million to shareholders via open-market repurchases, after returning $300 million to shareholders by the end of 2017. Notably, shares will be repurchased on the Frankfurt Stock Exchange.

2018 Guidance

QIAGEN has maintained its 2018 guidance for total net sales growth at about 6-7% at CER. This guidance also includes decreased U.S. HPV test sales to have an adverse impact of around 1.5% on total net sales growth in 2018. Further, sales of about $7 million during the second half of 2018 from the acquisition of STAT-Dx was taken into account. The Zacks Consensus Estimate for 2018 revenues is pegged at $1.54 billion.

Moreover, the adjusted EPS guidance has been reiterated at $1.31-$1.33 at CER. Our consensus estimate for 2018 earnings of $1.34 is above the guided range.

Further, favorable currency movements are expected to have a positive impact on 2018 net sales growth of 2-3% and of a penny to two cents per share on adjusted EPS.

The company also provided the financial guidance for the second quarter of 2018. Net sales are expected to grow 5-6% at CER. Adjusted EPS is expected at around 31-32 cents at CER on an underlying basis. The Zacks Consensus Estimate for earnings stands at 32 cents per share, coinciding with the high end of the company’s guided range.

Further, favorable currency movements are expected to have a positive impact on the second-quarter 2018 net sales growth of 2-3% and up to a penny on adjusted EPS.

Our Take

QIAGEN ended the first quarter on a solid note. We are impressed with the year-over-year growth in majority of the segments. The company also delivered a strong performance with respect to operating margin. Meanwhile, its commitment to return more to shareholders through increased repurchases reflects its solid cash position. Expectations of favorable currency movement in 2018 also buoy optimism.

We are also upbeat about QIAGEN’s recent receipt of FDA pre-market approval for PartoSure. Notably, this test helps in assessing the risk of spontaneous preterm birth in patients with symptoms of preterm labor. Further, the company plans to market the test in the United States in 2018. We encouragingly note that the PartoSure test has already been successfully launched in over 35 countries across Europe, the Middle East, Asia and Latin America.

On the flip side, a competitive landscape and strong reliance on collaborations remain major overhangs.

Zacks Rank & Key Picks

QIAGEN has a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader medical space which have reported solid results this season are Intuitive Surgical ISRG, Chemed Corp. CHE and Baxter International Inc. BAX. While Intuitive Surgical sports a Zacks Rank #1 (Strong Buy), Chemed and Baxter carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Intuitive Surgical reported first-quarter 2018 adjusted EPS of $2.44, which beat the Zacks Consensus Estimate by 22.6%. Revenues totaled $848 million, also surpassing the consensus estimate by 10.6%.

Chemed posted first-quarter 2018 adjusted EPS of $2.72, surpassing the Zacks Consensus Estimate of $2.37. Revenues came in at $439.2 million, beating the Zacks Consensus Estimate of $420 million.

Baxter posted first-quarter 2018 adjusted EPS of 70 cents, which beat the Zacks Consensus Estimate by 12.9%. Revenues of $2.68 billion also edged past the Zacks Consensus Estimate of $2.62 billion.

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