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QIAGEN (QGEN) Misses Q2 Earnings Estimates, Lowers View

Zacks Equity Research

QIAGEN N.V.’s QGEN second-quarter 2019 adjusted earnings per share (EPS) were 33 cents, missing the Zacks Consensus Estimate by 2.9%. The figure remained flat year over year. At constant exchange rate or CER, the quarter’s adjusted EPS was 34 cents.

Revenues in Detail

Net sales at actual rates in the second quarter inched up 1% on a year-over-year basis to $381.6 million (up 5% at CER). However, the top line missed the Zacks Consensus Estimate by 11.4%.

Geographical Revenue Update

In the quarter under review, sales from the Americas (47% of revenues) totaled $181 million, up 1% on a reported basis (1% at CER). Revenues from Europe-Middle East-Africa (31% of revenues) declined 2% reportedly (up 5% at CER) to $118 million. Further, revenues from Asia-Pacific/Japan (22% of revenues) rose 8% year over year on a reported basis (up 12% at CER) to $83 million.

QIAGEN N.V. Price, Consensus and EPS Surprise

 

QIAGEN N.V. Price, Consensus and EPS Surprise

QIAGEN N.V. price-consensus-eps-surprise-chart | QIAGEN N.V. Quote

 

Segmental Details

As of the second 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 49% of net sales) revenues were up 5% at CER to $188 million.

Life Sciences (51% of total revenues) reported revenues of $194 million, up 5% at CER. Sales derived from Applied Testing/Academia rose 5% at CER to $118 million. Pharma sales climbed 4% at CER in the second quarter to $76 million.

Operational Update

Gross profit in the quarter under review declined 3.1% to $245.9 million. Gross margin contracted 283 basis points (bps) to 64.4%.

Adjusted operating income (excluding items like acquisition-related intangible amortization) rose 8.6% year over year to $68.9 million in the second quarter. Adjusted operating margin expanded 124 bps to 18%.

Financial Update

QIAGEN exited the second quarter of 2019 with cash and cash equivalents of $624.6 million, up from $552.9 million at the end of the first quarter. Year to date, net cash provided by operating activities was $82.5 million compared with $118 million a year ago. Moreover, the company reported year-to-date free cash flow of $51.5 million compared with $94.1 million a year ago.

As of Jun 19, 2019, QIAGEN had repurchased approximately $180 million of shares.

2019 Guidance

QIAGEN has lowered its 2019 guidance. Total net sales growth is expected in the range of about 5-6% at CER, compared to the earlier projection of 7-8% at CER. The Zacks Consensus Estimate for 2019 revenues is pegged at $1.56 billion.

Adjusted EPS guidance for the full year is estimated in the band of $1.42-1.44 at CER, compared to the earlier projection of $1.45-1.47 at CER. The Zacks Consensus Estimate for 2019 EPS is pegged at $1.41, which is below the guided range.

The company also issued the financial projection for the third quarter of 2019. Net sales are envisioned to grow around 4- 5% at CER. Adjusted EPS is predicted within 35-36 cents at CER on an underlying basis. The Zacks Consensus Estimate for earnings stands at 37 cents, above the high end of the guided range. Our consensus estimate for revenues is pegged at $395.5 million.

Our Take

QIAGEN ended the second quarter on a dull note. A guidance cut indicates that this dull trend might continue through the year.

However, the company registered revenue growth across majority of its geographies. We are impressed with the year-over-year growth across all segments. Meanwhile, its commitment to return shareholders more through ramped-up repurchases reflects a solid cash position.

We are also upbeat about the company’s Sample to Insight portfolio progress in the quarter. Developments like QuantiFERON-TB’s growth at 6% CER, two FDA approvals of the new therascreen companion diagnostics, U.S. launch of the QIAstat-Dx with respiratory panel in partnership with McKesson are impressive. The company’s recent decision to restructure China-based next-generation sequencing (NGS) joint venture buoys optimism.

Zacks Rank & Key Picks

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

Some better-ranked stocks which posted solid results this earning season are Stryker Corporation SYK, Baxter International Inc. BAX and Intuitive Surgical, Inc. ISRG.

Stryker delivered second-quarter 2019 adjusted EPS of $1.98, beating the Zacks Consensus Estimate by 2.6%. Revenues of $3.65 billion surpassed the Zacks Consensus Estimate by 1.4%. The company carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Baxter delivered second-quarter 2019 adjusted EPS of 89 cents, which surpassed the Zacks Consensus Estimate of 81 cents by 9.9%. Revenues of $2.84 billion beat the Zacks Consensus Estimate of $2.79 billion by 1.9%. The company holds a Zacks Rank #2.

Intuitive Surgical reported second-quarter 2019 adjusted EPS of $3.25, which beat the Zacks Consensus Estimate of $2.85. Revenues were $1.1 billion, surpassing the Zacks Consensus Estimate of $1.03 billion. The company sports a Zacks Rank #1.

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