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Analyst Blog

On Jul 16, 2014, we initiated coverage on IDEXX  Laboratories, Inc. (IDXX - Analyst Report) – a developer, manufacturer and distributor of products and services primarily for the companion animal veterinary, livestock and poultry, water testing and dairy markets.

IDEXX reported mixed first-quarter 2014 results with its bottom line steering ahead of the Zacks Consensus Estimate and revenues missing our expectation.Earnings per share of 89 cents were up 8.5% year over year, a penny ahead of the Zacks Consensus Estimate. On the other hand, revenues of $360.2 billion increased 8% but missed the Zacks Consensus Estimate of $362 million by a whisker. 

The year-over-year growth on both fronts is indicative of the company’s consistent growth via organic means. We are at the same time encouraged by the global performance of the company during the first quarter.

In addition, IDEXX is also benefiting from the go-direct strategy in its organic business. Bolstered by strong and consistent Companion Animal Group (CAG) performance in the quarter, the company raised its full year 2014 revenue outlook and expects to reach the upper end of the organic growth guidance range of 9% to 11% with ease.

Backed by a strong cash position, the company remains committed to delivering incremental returns to investors, thereby leveraging earnings power. In the last reported quarter, IDEXX had bought back approximately 507,600 shares for $70 million.

However, dependence on third part distributors remains an overhang. Further, intense competition and currency fluctuations warrant caution.

IDEXX currently carries a Zacks Rank #3 (Hold).

Other Stocks to Consider

Investors interested in the medical instrument sector can consider better-ranked stocks like Accuray Inc. (ARAY - Analyst Report), Masimo Corp. (MASI - Analyst Report) and Sirona Dental Systems Inc. (SIRO - Snapshot Report). While Accuray and Masimo Corp. sport a Zacks Rank #1 (Strong Buy), Sirona Dental carries a Zacks Rank #2 (Buy).

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