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Bio-Techne (TECH) Beats Earnings, Revenue Estimates in Q4


Bio-Techne Corporation TECH reported fourth-quarter fiscal 2017 adjusted earnings per share (considering stock-based compensation expenses and related tax impact as regular expenses) of $1.02, up 17.2% from the year-ago quarter’s figure. Also, earnings surpassed the Zacks Consensus Estimate by 12.1%. The year-over-year rise in earnings was driven by an increase in sales.

Full-year adjusted EPS came in at $3.38, compared with $3.36 in the year-ago period.

Quarter Details

Net sales in the reported quarter rose 16.2% (up 8% organically) year over year to $156.6 million, outpacing the Zacks Consensus Estimate of $149 million.

Full-year sales grew 12.8% year over year to $563.0 million (up 6% organically). Currency fluctuation had a negative impact of 1% and acquisitions contributed 8% to revenues.

Bio-Techne Corp Price, Consensus and EPS Surprise

Bio-Techne Corp Price, Consensus and EPS Surprise | Bio-Techne Corp Quote

The company has three divisions, namely, Biotechnology, Protein Platforms and Diagnostics.

The Biotechnology division registered 15% year-over-year revenue growth in the fourth quarter (an increase of 2% organically) to $97.2 million. This division was impacted by end-market issues in both academia and Biopharma in the U.S. Also, the lower PrimeGene sales in China had a negative impact. Product growth was driven by the sale of antibodies.

Protein Platforms division witnessed growth of 22% from the prior-year quarter (up 24% organically) to $26.8 million. Per management, growth was driven by new product introduction and applications.

The Diagnostics segment's net sales were $32.6 million, up 14% organically from the year-ago quarter. The upside was driven by large orders for controls, kits, and bulk reagents from OEM customers.

On a geographic basis, fourth-quarter revenues in the U.S. witnessed mid-single-digit growth. Meanwhile, growth in Europe was impressive. It witnessed double-digit growth in the fourth quarter. Asia, particularly China, performed well. Except Japan (registering low single-digit growth), the rest of APAC experienced solid growth in the quarter under review.

Margin Details

Gross margin contracted 118 basis points (bps) year over year to 65.45% in the reported quarter. Selling, general and administrative expenses (SG&A) were up 24.1% year over year to $47.2 million. Research & development (R&D) expenses totaled $13.7 million, up 17.6% from the year-ago quarter. This led to a 22.6% increase in operating expenses, which amounted to $609 million. Adjusted operating margin in the quarter contracted 320 bps to 26.5% from the year-ago quarter.

Balance Sheet

Bio-Techneexited the fiscal 2017 with cash and cash equivalents of $91.6 million, compared with $64.2 million at the end of fiscal 2016. The company had total long-term debt of $343.8 million at the end of fiscal 2017, compared with $91.5 million at the end of the preceding fiscal.

Our Take

Bio-Techneexited the fourth year on a solid note, with earnings and revenues exceeding theZacks Consensus Estimate.The company witnessed growth in all of its three segments. We are encouraged to note that the company is currently focusing on global expansion. Management hopes to complete one or more acquisitions in fiscal 2018. The company is focusing on product innovation through research and development.

However, currency headwind and poor margins raise concern.

Zacks Rank & Other Key Picks

Bio-Techne currently has a Zacks Rank #2 (Buy). Other top-ranked medical stocks are Edwards Lifesciences Corp. EW , Myriad Genetics, Inc. MYGN and Align Technology, Inc. ALGN . Edwards Lifesciences and Align Technology sports a Zacks Rank #1 (Strong Buy), Myriad Genetics carries a Zacks Rank# 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Edwards Lifesciences’ second-quarter 2017 adjusted earnings improved 42.1% year over year, primarily driven by strong sales growth at the company’s transcatheter heart valves business. The stock has gained around 5.1% over the last three months.

Align Technology’s second-quarter 2017 adjusted EPS of 85 cents were up 37.1% year over year. Revenues grew 32.3% year over year to $356.5 million. The stock has rallied roughly 28.3% over the last three months.

Myriad Genetics, Inc. (MYGN) reported adjusted earnings per share (EPS) of 30 cents in the fourth quarter of fiscal 2017, down 17% year over year.
Total revenue rose 8% year over year to $201 million in the fourth quarter.

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