On Nov 22, we issued an updated research report on Delaware, NJ-based IDEXX Laboratories, Inc. IDXX – a manufacturer and distributor of products and services primarily for the companion animal veterinary, livestock and poultry, water testing and dairy markets. The company currently sports a Zacks Rank #1 (Strong Buy).
IDEXX posted mixed third-quarter 2016 results, with earnings per share (EPS) handily beating the Zacks Consensus Estimate while revenues missed the mark. Solid organic revenue growth buoys optimism. The company’s raised EPS guidance for 2016 also indicates a bullish trend, going forward.
IDEXX continues to demonstrate solid growth globally, with strong international expansion. During the third quarter of 2016, the overall international revenues reflected strong organic growth of 11%, with 17% growth in international CAG Diagnostic's recurring revenues.
Strong 20% consumable revenue growth owing to incremental benefits from SDMA supporting continued double-digit gains in lab revenues as well as improved lab revenue gains primarily drove this overseas growth.
With respect to its Companion Animal Group (“CAG”) segment, IDEXX witnessed solid recurring Diagnostic gains and continued strong premium instrument placements, including benefits from the launch of SediVue. The company also holds a robust cash balance position.
On the flip side, foreign currency headwinds are a major concern, with approximately 39% of IDEXX’s sales coming from overseas. Evidently, foreign exchange fluctuations are expected to reduce its 2016 revenue growth by $2 million or 1% and EPS by 20 cents.
Moreover, the instrument consumables and rapid assay products at the company’s CAG segment are often sold by third-party distributors. Unfavorable distributor purchasing dynamics can affect IDEXX’s sales growth for these products. Competitive headwinds also pose a threat to the stock.
Other Key Picks
Other favorably ranked medical stocks are NxStage Medical Inc. NXTM, Baxter International Inc. BAX and Bovie Medical Corporation BVX. NxStage Medical and Baxter International sport a Zacks Rank #1 (Strong Buy), while Bovie Medical carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
NxStage Medical surged 23.4% in the last one year compared to the S&P 500’s 5.5% over the same period. The company has a four-quarter average positive earnings surprise of 50.00%.
Baxter International rallied 21.4% over one year, much higher than the S&P 500’s 5.5%. It has a trailing four-quarter average positive earnings surprise of 27%.
Bovie Medical recorded a 119.4% gain in the past one year, way better than the S&P 500’s 5.5%. The company has a trailing four-quarter average positive earnings surprise of 28.7%.
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