IDEXX Laboratories, Inc. IDXX is slated to report first-quarter 2020 results on Apr 30, before market open. In the last reported quarter, the company delivered a positive earnings surprise of 14.29%. The company delivered a positive surprise in each of the trailing four quarters, the average beat being 10.23%.
Let's take a look at how things have shaped up prior to this announcement.
Factors at Play
IDEXX is expected to have sustained its strong earnings trajectory in the first quarter, courtesy of a global surge in Companion Animal Group (CAG) Diagnostic revenues. Although the ongoing coronavirus-induced economic crisis has affected the global animal health market, it is unlikely to have severely impacted the company’s first-quarter revenues.
From January to March, this S&P 500 stock declined 7.3%, much lower relative to the benchmark’s overall 19.6% fall. We note that the global supply chain disruption since the beginning of February impacted the stock market as a whole, and IDEXX too came into the selloff territory. However, its relative performance was better than other stocks of the index as well as the broader industry.
IDEXX Laboratories, Inc. Price and EPS Surprise
IDEXX Laboratories, Inc. price-eps-surprise | IDEXX Laboratories, Inc. Quote
One major reason that might have worked in favor of IDEXX’s business during the first quarter was that there were only a few cases of pets being found COVID-19 positive globally. On Mar 13, the company itself declared that it did not see SARS-CoV-2 positive results in pets. The company noted that it evaluated thousands of canine and feline specimens during validation of a new veterinary test system for the COVID-19 virus. The specimens used for test development and validation were obtained from specimens submitted to IDEXX Reference Laboratories for PCR testing.
Through the past few quarters, the company has been witnessing solid organic revenues in CAG segment on strong contributions from consumable and reference lab as well as the growing adoption of rapid assays, and Veterinary Software, Services and Diagnostic Imaging Systems.
In the United States, IDEXX has been generating strong CAG Diagnostic recurring revenues, led by steady growth in reference lab, consumables and rapid assay sales. Continued growth in the Veterinary Software portfolio can be attributed to strength in the global catalyst install base of Cornerstone, Neo, Animana and Smart Flow systems.
International reference laboratory services are likely to have seen a robust first quarter too (without considering the global supply chain disruption issue), thanks to commercial expansion measures like the IDEXX 360 programs, and efforts to maintain momentum in international markets’ catalyst install bases.. Through the quarter, the rapid assay business is expected to have grown on the continued expansion of global SNAP Pro installed base and robust performance of its 4Dx plus franchise. Global consumable revenues are also expected to have witnessed strong growth in the to-be-reported quarter, led by increases in diagnostic test utilization and expansion of the company’s installed instrument base.
The Zacks Consensus Estimate for first-quarter 2020 revenues is pegged at $632.4 million, indicating 9.8% rise from the prior-year quarter’s reported figure. The same for earnings is pegged at $1.23, suggesting 5.1% rise from the figure reported in the year-ago quarter.
Per our proven model, a stock with the combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP has a good chance of beating estimates. This is the case here as you will see below.
Earnings ESP: It has an Earnings ESP of +0.41%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: IDEXX carries a Zacks Rank #3.
Other Stocks Worth a Look
Here are a few other medical stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle.
Exact Sciences Corporation EXAS currently carries a Zacks Rank of 2 and has an Earnings ESP of +26.79%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Aphria Inc. APHA carries a Zacks Rank of 2 at present and has an Earnings ESP of +35.71%.
DexCom, Inc. DXCM is a Zacks #2 Ranked stock with an Earnings ESP of +143.90%.
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