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IDEXX Laboratories Banks on Global Prospects, CAG Strength


On Dec 5, we issued an updated research report on IDEXX Laboratories, Inc. IDXX. The stock currently has a Zacks Rank #2 (Buy).

This leading molecular diagnostic company has been trading above the broader industry. The stock has gained 35.3% over the last year in comparison to 21.7% of the broader industry.

IDEXX derives a large share of revenues from its Companion Animal Group (CAG) segment. In the third quarter, CAG organic revenues rose high single digits on CAG Diagnostics recurring organic revenue growth and VetLab consumables impressive organic revenue growth. We are upbeat about the company’s expanding premium instrument base in the United States and international markets, including growth in competitive instrument placements, increasing utilization and continued customer retention. Moreover, we believe management’s innovation-based global strategy is leading to growth in CAG Diagnostics. Notably, IDEXX widened its cloud technology portfolio through the addition of rVetLink.

We expect the company to demonstrate solid global growth in the days ahead. International revenues in the second quarter of 2017 grew high single digits, driven by a rise in recurring organic revenues at CAG Diagnostics and gains in the Water business.

Additionally, the company has a strong cash balance that allows it to carry out share repurchases.

On the flip side, IDEXX’s high dependence on third-party distributors and intense competition are major deterrents. Moreover, the CAG business is likely to suffer from adverse currency fluctuations owing to expanding international operations.

The company’s estimate revision trend for the current year has been positive. In the last 60 days, five analysts revised their estimates upward, with no movement in the opposite direction. The magnitude of estimate revision for earnings increased around 2.2% to $3.24 per share.

Other Key Picks

Other top-ranked medical stocks are PetMed Express, Inc. PETS, Align Technology, Inc. ALGN and Myriad Genetics, Inc. MYGN. Notably, PetMed, Align Technology and Myriad Genetics sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PetMed has a long-term expected earnings growth rate of 10%. The stock has rallied roughly 82.8% over a year.

Align Technology has a long-term expected earnings growth rate of 28.9%. The stock has gained 131.7% in a year.

Myriad Genetics has a long-term expected earnings growth rate of 15%. The stock has gained 95.9% in a year.

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