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Bio-Rad (BIO) Beats Earnings and Revenue Estimates in Q3


Bio-Rad Laboratories, Inc. BIO reported third-quarter 2017 earnings of 91 cents per share, a 46.8% surge from the year-ago figure. The bottom line also surpassed the Zacks Consensus Estimate of 33 cents by a wide margin. Notably, net income in the quarter was favorably impacted by higher sales and a significantly improved gross margin.

Net sales came in at $535 million, up 5.2% year over year (up 3.4% at constant exchange rate or CER). The top line also beat the Zacks Consensus Estimate of $521 million by 2.7%. The year-over-year improvement in sales was largely driven by a strong performance in the Europe and Asia Pacific. Also, Bio-Rad registered solid growth across many key life science and diagnostics product areas.

Quarter in Detail

On a segmental basis, the Life Science’s net sales came in at $193.6 million, up 8.7% year over year (up 7.6% at CER). At CER, sales rose on the back of a strong performance at Droplet Digital PCR (ddPCR), food safety and gene expression product lines as well as revenues generated from the recent acquisition of RainDance Technologies. This growth was however, offset by a decrease in process chromatography media sales.

Bio-Rad Laboratories, Inc. Price, Consensus and EPS Surprise

Bio-Rad Laboratories, Inc. Price, Consensus and EPS Surprise | Bio-Rad Laboratories, Inc. Quote

Within Clinical Diagnostics, the company registered sales of $338 million, up 3.3% year over year (up 1.2% at CER). This upside resulted from an increase in blood typing, immunology and quality control product lines.

Gross margin of 56.9% during the reported quarter was up 199 basis points (bps) year over year on an 8.9% climb in gross profits. Adjusted operating margin in the same period expanded 315 basis points to 8.7% with 65.1% rise in operating profit.

The company exited the third quarter with cash and cash equivalents plus short-term investments of $721 million compared with $717 million at the end of the second quarter. Year to date, net cash provided by operating activities was $34.5 million compared with $121.3 million in the year-ago period.

2017 Guidance

For fourth-quarter 2017, Bio-Rad expects net sales in the range of $615-$625 million. This includes sales from the recently-acquired RainDance Technologies. The stock has seen the Zacks Consensus Estimate for current-quarter’s sales being pegged at $617.2 million within the projected band. Fourth-quarter gross margin is anticipated to be within 54.5-55%, in line with the year-to-date results. The operating margin for the fourth quarter of 2017 is anticipated to be within the band of 9.5-10.5%.

Bottom Line

Bio-Rad posted a strong quarterly show with both earnings and sales beating the Zacks Consensus Estimate by significant margins. Sales growth was majorly driven bystrong sales of Droplet Digital PCR instruments and consumables, cell biology and food safety products in the life science group. Also, strong growth in product for blood typing, quality control and autoimmune testing in the diagnostic group contributed to the top-line boost in the quarter under review.

Zacks Rank & Key Picks

Bio-Rad has a Zacks Rank #3 (Hold). A few better-rankedmedical stocks are PetMed Express, Inc. PETS, Luminex Corporation LMNX and Intuitive Surgical, Inc. ISRG. While PetMed and Luminex sport a Zacks Rank #1 (Strong Buy), Intuitive Surgical carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PetMed reported earnings per share of 43 cents in the second quarter of fiscal 2018, up 79.2% from the year-ago quarter’s 24 cents. Also, gross margin expanded 548 bps year over year to 35.2% in the reported quarter.

Luminex reported adjusted earnings per share of 19 cents in the third quarter of 2017, up 216.7% year over year. Revenues increased almost 4.1% year over year to $74.1 million.

Intuitive Surgical posted adjusted earnings of $2.77 per share in the third quarter of 2017, up 34.5% on a year-over-year basis. Also, revenues grew 18% year over year to $806.1 million.

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