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QIAGEN's (QGEN) Q1 Earnings Top Estimates, Revenues Miss

Zacks Equity Research

QIAGEN N.V.'s QGEN 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.

Segmental Details

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).

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

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.

Operational Update

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%.

Financial Update

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.

2019 Guidance

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.

Our Take

QIAGEN ended the first quarter on a mixed note.  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 its 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 15% CER, FDA approval of the new therascreen companion diagnostic for FGFR biomarker, European rollout of the QIAstat-Dx and NeuMoDx automation systems are impressive.  The company’s launch of cancer research products in liquid biopsy and NGS panels with bioinformatics and strong QIAsymphony placements slated for 2019 buoy optimism.

Zacks Rank

QIAGEN currently carries a Zacks Rank #2 (Buy).

Earnings of MedTech Majors at a Glance

A few other top-ranked stocks with solid results this earnings season are Stryker Corporation SYK, Abbott Laboratories ABT and CONMED Corporation CNMD, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stryker delivered first-quarter 2019 adjusted EPS of $1.88, beating the Zacks Consensus Estimate by 2.2%. Meanwhile, revenues of $3.52 billion were in line with the consensus estimate.

Abbott reported first-quarter 2019 adjusted EPS of 63 cents, topping the Zacks Consensus Estimate by 3.3%. Moreover, worldwide sales of $7.54 billion beat the consensus estimate of $7.47 billion.

CONMED posted first-quarter 2019 adjusted EPS of 57 cents, which exceeded the Zacks Consensus Estimate of 54 cents. Also, revenues of $218.4 million outshined the consensus mark of $213 million.

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