QIAGEN (QGEN) Faces COVID-Support Sales Drop, Huge Debt
QIAGEN N.V.’s QGEN overdependence on relationships with collaborative partners and foreign exchange headwinds are major downsides. The stock currently has a Zacks Rank #5 (Strong Sell).
Over the past six months, QIAGEN has underperformed the industry it belongs to. The stock has declined 6.1% compared with the industry’s 3.1% fall.
With gradually falling COVID-19 cases, since the beginning of 2021, the company’s COVID-19 testing related product lines are seeing significant decline in sales. This trend should continue through the rest of the year. Added to this, we are worried about the huge debt on its balance sheet. As per the last report, the company’s debt in the first quarter of 2021 was much higher than the quarter-end cash and cash equivalent, and short-term investments level. The quarter’s total debt-to-capital of 40.4% indicates a leveraged balance sheet.
QIAGEN N.V. Price
QIAGEN N.V. price | QIAGEN N.V. Quote
Stiff competition from firms providing competitive pre-analytical solutions and other products used by QIAGEN’s customers persist. Contraction of gross margin in the reported quarter is worrying too. High exposure to risks of foreign currency movement is observed.
On a positive note, QIAGEN exited the first quarter of 2021 with better-than-expected revenues and earnings. It registered revenue growth across all geographies and both its operating segments in the first quarter. The company’s high level of sales for product groups used in the COVID-19 pandemic response drove the top line. Sample technologies products witnessed strong year-over-year growth driven by double-digit constant exchange rate or CER growth for non-COVID products, particularly consumables kits for DNA extraction. Also, product groups used in COVID-19 testing, particularly automated RNA solutions, saw solid demand during the reported quarter.
During the first quarter, QIAGEN’s QuantiFERON-TB sales improved 22% led by strong demand in the United States. Sales of QIAstat-Dx and NeuMoDx solutions remained at a high level as well. The company also registered high level of COVID-19 testing products sales during the reported quarter. QIAGEN’s QuantiFERON-TB Access sales registered double-digit growth during the first quarter of 2021. The company, on the first-quarter earnings call, confirmed the launch of QIAreach-TB in 2021, which is a new version of QuantiFERON-TB test. The company also noted that it is on track to achieve 2021 sales goal of more than $230 million for the QuantiFERON franchise.
Key Picks
A few better-ranked stocks from the broader medical space are Envista Holdings Corporation NVST, BellRing Brands, Inc. BRBR and Baxter International Inc. BAX, each carrying a Zacks Rank #2 (Buy). You can see the complete list of Zacks #1 Rank (Strong Buy) stocks here.
Envista Holdings has an estimated long-term earnings growth rate of 26%.
BellRing Brands has an estimated long-term earnings growth rate of 22%.
Baxter International has a projected long-term earnings growth rate of 9%.
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