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IDEXX Laboratories Rides High on Strong CAG, Global Growth


On Sep 11, we issued an updated research report on IDEXX Laboratories, Inc. IDXX, a leading molecular diagnostic company. The stock currently has a Zacks Rank #2 (Buy).

It is encouraging to note that IDEXX continues to demonstrate solid global growth on potent international expansion. International revenues in the last-reported second quarter of 2017 grew in high single digits, driven by an 11% organic rise in CAG Diagnostics recurring revenues and 12.3% gains in Water business. This indicated continued consumable revenue gains supported by a strong Catalyst instrument customer base and average testing utilization.

IDEXX derives the lion’s share of revenues from its Companion Animal Group segment (CAG). In the second quarter, CAG organic revenues rose low double digits on a year-over-year basis, supported by CAG Diagnostics recurring organic as well as CAG instrument revenue growth. We believe management’s innovation-based global strategy is leading to growth in CAG Diagnostics.

Also, IDEXX recently announced the addition of rVetLink to its portfolio of technological applications. Notably, rVetLink is an advanced all-inclusive referral management solution designed for specialty care hospitals that simplifies the referral procedure between primary care and specialty care veterinarians.

Additionally, the company has a strong cash balance that enables it to carry out share repurchase programs and in turn provide solid returns to investors.

On the flipside, over the last six months, IDEXX has been trading below the broader industry with respect to share price movement. The stock has rallied 5.1% over this period in comparison to 11.7% gain of the broader industry. IDEXX’s high dependence on third-party distributors and intense competition continue to pose threats. Moreover, with growing international expansion, the company's Companion Animal Diagnostics business is likely to suffer from adverse currency fluctuations. A competitive landscape in the overseas market weighs on the company as well.

Other Key Picks

A few other top-ranked medical stocks are Edwards Lifesciences Corporation EW, Lantheus Holdings, Inc. LNTH and Amedisys, Inc. AMED. Edwards Lifesciences sports a Zacks Rank #1 (Strong Buy), while Lantheus Holdings and Amedisys carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. The stock has rallied roughly 22.2% over the last six months.

Lantheus Holdings has a long-term expected earnings growth rate of 12.5%. The stock has gained 41.2% over the last six months.

Amedisys has a long-term expected earnings growth rate of 18.2%. The stock has gained around 5.3% over the last six months.

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