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Mesa Laboratories and Disney have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – December 16, 2021 – Zacks Equity Research shares Mesa Laboratories (MLAB - Free Report) as the Bull of the Day, and Disney (DIS - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Costco Wholesale Corp. (COST - Free Report) , United Natural Foods (UNFI - Free Report) and The Hain Celestial Group (HAIN - Free Report) .
Mesa Laboratories is a $1.7 billion provider of quality control monitoring and validation instruments serving niche markets in healthcare, industrial, pharmaceutical, medical and food processing applications.
I last wrote about Mesa Labs on October 8 after the company made an important acquisition that was immediately accretive to earnings and so analysts quickly raised estimates. I'll explain that move again below. First let's talk about their recent quarterly report.
On November 4, Mesa Labs delivered Q2 FY22 EPS of $1.87 beating the Zacks Consensus Estimate of $1.29 per share by 45%. This compares to earnings of $1.91 per share a year ago.
MLAB, which belongs to the Zacks Medical Instruments industry, posted revenues of $35.84 million for the quarter ended September 2021, surpassing the Zacks Consensus Estimate by 2.55%. This compares to year-ago revenues of $31.86 million. The company has topped consensus revenue estimates four times over the last four quarters.
Analysts See Strong Growth Ahead
The Zacks revenue consensus for this FY22 is $174 million, representing 30% growth. And next year is projected to be just as strong with early indications calling for $225 million, a 29% annual advance.
After the big earnings beat, the Zacks EPS consensus for FY22 (ends March) rose from $7.68 to $8.10 to account for the positive surprise. But next fiscal year's estimates rose as well. KeyBanc took their FY23 (begins April) estimates from $10.86 to $11.03, representing 36% annual growth.
Not all analysts have raised their EPS estimates yet and coverage is low for this small cap. Analysts are still getting their spreadsheets around the big deal that just went down.
MLAB Adds a Clinical Genomics Division
Here's what I wrote in early October...
Mesa Labs is back in the upper realms of the Zacks Rank after analysts raised estimates to account for a key acquisition that will allow expansion into a critical new healthcare arena. This deal has also vaulted shares to new highs above $300.
On September 14, Mesa Laboratories announced that it has entered into a definitive agreement to acquire Agena Bioscience for a cash purchase price of $300 million. Headquartered in San Diego, Agena is a leading molecular diagnostics tools company that develops, manufactures, and supplies highly sensitive, low-cost, high-throughput, genetic analysis solutions to clinical labs and development partners globally.
Peter Dansky, CEO of Agena, will join Mesa to lead the new Clinical Genomics Division.
Excluding the impact of COVID-19 related revenues, Agena is expected to add between $63 million to $67 million of revenues -- about a 50% increase -- during the first 12 months of ownership, deliver high single digit organic revenues growth over the next several years and excluding the impact of purchase accounting, generate gross profit percentages in the mid to high 60's.
Additionally, excluding the impact of COVID-19 related revenues, purchase accounting and integration expenses, Mesa expects adjusted operating income as a percentage of revenues to approach 20% for the same first 12 months of ownership.
Following the news, KeyBanc analysts wrote this...
Former Danaher executive Gary Owens, who was head of Genomics and now CEO of Mesa Labs, announced the acquisition of Agena Biosciences. Agena is significantly non-GAAP EPS accretive, increases overall growth of Mesa, and like most diversified LST companies establishes a diagnostic platform.
We estimate a blended organic growth rate 200-300 bps above the prior pace of 4-6%. Using a new sum-of-the-parts model, we raise our Fair Value from $300 to $330 per share.
The Exploding World of Genetic Diagnostics
One of the most exciting areas of medicine right now involves companies offering innovative genomics and testing solutions for doctors, scientists, and clinical lab services. Three such companies, all with different niches, are Invitae, Natera and Pacific Biosciences.
It looks like Mesa Labs' recent expansion will offer them more opportunities to serve companies like these.
Disclosure: I own PACB and NTRA shares for the Zacks Healthcare Innovators portfolio.
After Disney's big earnings miss last month, Wall Street analysts took estimates down considerably for the current fiscal year, which began in October.
The Zacks Consensus fell 16% from EPS of $5.10 to $4.28. And the outlook also dimmed for the following year, with the Zacks Consensus dropping 9% from $6.41 to $5.81.
In addition to the 27% EPS miss, revenues of $18.53 billion, while advancing 26% from the year-ago quarter, lagged the Zacks Consensus Estimate of $18.85 billion.
But it was company expansion and spending plans that likely motivated analysts to revise their earnings estimates lower.
The company expects to incur elevated costs in fiscal 2022 due to expenses associated with new projects such as Star Wars: Galaxy's Edge, Avengers Campus, and the Epcot expansion, as well growth investment in its cruise ship line.
And Disney announced it intends to expand its local content portfolio in Asia, India, Europe, and Latin America in fiscal 2022.
While steady revenue growth supports the shares -- FY22 is expected to top $83.5 billion for 24% growth -- the EPS hiccup may have some investors questioning the 25X forward P/E ratio.
Disney is a one-of-a-kind blue-chip franchise that belongs in any portfolio seeking stable consumer discretionary exposure. And a better buying opportunity for the stock may be right around the corner as soon as EPS estimates stabilize.
The Zacks Rank will let you know.
Additional content:
3 Stocks to Buy as Online Grocery Sales Continue to Boom
Online grocery sales have been soaring ever since the coronavirus outbreak, which pushed millions to shop almost everything online. Grocery being essential goods was the biggest beneficiary as people stayed at home and stocked up food.
The trend has continued since then. Although millions are vaccinated now, they have finally realized the ease of shopping online. With the pandemic far from over and the Omicron variant of the virus once again igniting fears, grocery stocks like Costco Wholesale Corp.,United Natural Foods and The Hain Celestial Group are likely to benefit in the near term.
Grocery Sales Soar in November
Growing demand from customers over the past year has led retailers to shift focus and they are now strengthening their e-commerce arm to boost online grocery sales. Shopping habits have changed drastically over the past year and people are more e-commerce dependent.
According to the latest Brick Meets Click/Mercatus Grocery Shopping Survey, the U.S. online grocery market grew 6% in November to a total of $8.6 billion in sales compared with $8.1 billion a year ago. Of these, $7.0 billion came from the pickup/delivery segments and $1.6 billion from ship-to-home.
The gains were primarily driven by a healthy increase in the active shopper base. The report further mentions that around 69 million U.S. households shopped for groceries online, jumping 16% year over year. One-third of the total monthly active users in November were between the age group of 30- and 40–year olds. Shoppers in this segment have grown 25% year over year.
The importance of pickup grew following the Covid-19 outbreak. This segment saw total dollar sales jumping 29% year over year.
Bright Future for Online Grocery
According to the U.S. Online Grocery Report 2022 released by Spryker Systems, an enterprise digital commerce platform, the online grocery market is poised to grow in the coming days. The report states that around 21% of Americans plan to buy most or all their grocery online by 2024.
The report further states that of the 2,500 surveyed, 77% plan to buy from big box retailers as they have a strong online arm. Moreover, 47% of Americans polled shop at least some of their groceries online, while more than 1 in 4 shoppers buy all their weekly groceries online.
Besides, the report shows that 34% of Americans spend more than $100 on buying groceries online every week. This gives a clear picture of how fast the online grocery segment is growing.
Also, the pandemic is far from over, with the Omicron variant of the coronavirus once again compelling states to reinstate restrictions and mask mandates. This will make people continue to depend on e-commerce for shopping given the safety aspects.
Besides, experts believe that e-commerce is here to stay as grocery players are fast shifting focus to the online business. Groceries are necessities and people will continue buying them.
Our Choices
Given this situation, investing in grocery stocks with a strong online presence should lead to solid returns going forward. We have picked four such stocks, each currently carrying either a Zacks Rank #1 (Strong Buy) or #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Costco sells high volumes of food and general merchandise (including household products and appliances) at discounted prices through membership warehouses. Costco is one of the largest warehouse club operators in the United States. COST also operates e-commerce websites in the United States, Canada, the United Kingdom, Mexico, Korea, Taiwan, Japan and Australia.
Costco’s expected earnings growth rate for the current year is 13.5%. The Zacks Consensus Estimate for current-year earnings has improved 5.7% over the past 60 days. Shares of COST have gained 4.6% in the past 30 days. Costco has a Zacks Rank #2.
United Natural Foods is the leading distributor of natural, organic and specialty food and non-food products in the United States and Canada. UNFI carries more than 1,10,000 high-quality natural, organic and specialty products, consisting of national, regional and private label brands in six product categories.
These categories are — grocery and general merchandise, produce, perishables and frozen foods, nutritional supplements and sports nutrition, bulk and foodservice products as well as personal care items. United Natural Foods has two principal divisions — the wholesale and the manufacturing and branded products unit.
United Natural Foods’ expected earnings growth rate for the current year is 7.7%. The Zacks Consensus Estimate for current-year earnings has improved 2.5% over the past 60 days. Shares of UNFI have advanced 38.9% over the past three months. United Natural Foods carries a Zacks Rank #2.
The Hain Celestial Group produces, distributes, markets, and sells various natural and organic foods as well as personal care products with operations in North America and Europe. HAIN offers popular better-for-you groceries (non-dairy beverages and frozen desserts, flour and baking mixes, cereals, condiments, cooking oils, infant and toddler food, etc.), snacks (potato and vegetable chips, organic tortilla style chips, whole grain chips and popcorn, etc.) and tea (include herb teas such as Lemon Zinger, Peppermint, Mandarin Orange Spice, Cinnamon Apple Spice, Red Zinger, etc.). The Hain Celestial Group is the largest manufacturer in the natural foods segment and has several leading brands.
The Hain Celestial Group’s expected earnings growth rate for the current year is 14.5%. The Zacks Consensus Estimate for current-year earnings has improved 4.4% over the past 60 days. Shares of HAIN have advanced 6.4% over the past three months. The Hain Celestial Group carries a Zacks Rank #2.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Mesa Laboratories and Disney have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – December 16, 2021 – Zacks Equity Research shares Mesa Laboratories (MLAB - Free Report) as the Bull of the Day, and Disney (DIS - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Costco Wholesale Corp. (COST - Free Report) , United Natural Foods (UNFI - Free Report) and The Hain Celestial Group (HAIN - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Mesa Laboratories is a $1.7 billion provider of quality control monitoring and validation instruments serving niche markets in healthcare, industrial, pharmaceutical, medical and food processing applications.
I last wrote about Mesa Labs on October 8 after the company made an important acquisition that was immediately accretive to earnings and so analysts quickly raised estimates. I'll explain that move again below. First let's talk about their recent quarterly report.
On November 4, Mesa Labs delivered Q2 FY22 EPS of $1.87 beating the Zacks Consensus Estimate of $1.29 per share by 45%. This compares to earnings of $1.91 per share a year ago.
MLAB, which belongs to the Zacks Medical Instruments industry, posted revenues of $35.84 million for the quarter ended September 2021, surpassing the Zacks Consensus Estimate by 2.55%. This compares to year-ago revenues of $31.86 million. The company has topped consensus revenue estimates four times over the last four quarters.
Analysts See Strong Growth Ahead
The Zacks revenue consensus for this FY22 is $174 million, representing 30% growth. And next year is projected to be just as strong with early indications calling for $225 million, a 29% annual advance.
After the big earnings beat, the Zacks EPS consensus for FY22 (ends March) rose from $7.68 to $8.10 to account for the positive surprise. But next fiscal year's estimates rose as well. KeyBanc took their FY23 (begins April) estimates from $10.86 to $11.03, representing 36% annual growth.
Not all analysts have raised their EPS estimates yet and coverage is low for this small cap. Analysts are still getting their spreadsheets around the big deal that just went down.
MLAB Adds a Clinical Genomics Division
Here's what I wrote in early October...
Mesa Labs is back in the upper realms of the Zacks Rank after analysts raised estimates to account for a key acquisition that will allow expansion into a critical new healthcare arena. This deal has also vaulted shares to new highs above $300.
On September 14, Mesa Laboratories announced that it has entered into a definitive agreement to acquire Agena Bioscience for a cash purchase price of $300 million. Headquartered in San Diego, Agena is a leading molecular diagnostics tools company that develops, manufactures, and supplies highly sensitive, low-cost, high-throughput, genetic analysis solutions to clinical labs and development partners globally.
Peter Dansky, CEO of Agena, will join Mesa to lead the new Clinical Genomics Division.
Excluding the impact of COVID-19 related revenues, Agena is expected to add between $63 million to $67 million of revenues -- about a 50% increase -- during the first 12 months of ownership, deliver high single digit organic revenues growth over the next several years and excluding the impact of purchase accounting, generate gross profit percentages in the mid to high 60's.
Additionally, excluding the impact of COVID-19 related revenues, purchase accounting and integration expenses, Mesa expects adjusted operating income as a percentage of revenues to approach 20% for the same first 12 months of ownership.
Following the news, KeyBanc analysts wrote this...
Former Danaher executive Gary Owens, who was head of Genomics and now CEO of Mesa Labs, announced the acquisition of Agena Biosciences. Agena is significantly non-GAAP EPS accretive, increases overall growth of Mesa, and like most diversified LST companies establishes a diagnostic platform.
We estimate a blended organic growth rate 200-300 bps above the prior pace of 4-6%. Using a new sum-of-the-parts model, we raise our Fair Value from $300 to $330 per share.
The Exploding World of Genetic Diagnostics
One of the most exciting areas of medicine right now involves companies offering innovative genomics and testing solutions for doctors, scientists, and clinical lab services. Three such companies, all with different niches, are Invitae, Natera and Pacific Biosciences.
It looks like Mesa Labs' recent expansion will offer them more opportunities to serve companies like these.
Disclosure: I own PACB and NTRA shares for the Zacks Healthcare Innovators portfolio.
Bear of the Day:
After Disney's big earnings miss last month, Wall Street analysts took estimates down considerably for the current fiscal year, which began in October.
The Zacks Consensus fell 16% from EPS of $5.10 to $4.28. And the outlook also dimmed for the following year, with the Zacks Consensus dropping 9% from $6.41 to $5.81.
In addition to the 27% EPS miss, revenues of $18.53 billion, while advancing 26% from the year-ago quarter, lagged the Zacks Consensus Estimate of $18.85 billion.
But it was company expansion and spending plans that likely motivated analysts to revise their earnings estimates lower.
The company expects to incur elevated costs in fiscal 2022 due to expenses associated with new projects such as Star Wars: Galaxy's Edge, Avengers Campus, and the Epcot expansion, as well growth investment in its cruise ship line.
And Disney announced it intends to expand its local content portfolio in Asia, India, Europe, and Latin America in fiscal 2022.
While steady revenue growth supports the shares -- FY22 is expected to top $83.5 billion for 24% growth -- the EPS hiccup may have some investors questioning the 25X forward P/E ratio.
Disney is a one-of-a-kind blue-chip franchise that belongs in any portfolio seeking stable consumer discretionary exposure. And a better buying opportunity for the stock may be right around the corner as soon as EPS estimates stabilize.
The Zacks Rank will let you know.
Additional content:
3 Stocks to Buy as Online Grocery Sales Continue to Boom
Online grocery sales have been soaring ever since the coronavirus outbreak, which pushed millions to shop almost everything online. Grocery being essential goods was the biggest beneficiary as people stayed at home and stocked up food.
The trend has continued since then. Although millions are vaccinated now, they have finally realized the ease of shopping online. With the pandemic far from over and the Omicron variant of the virus once again igniting fears, grocery stocks like Costco Wholesale Corp.,United Natural Foods and The Hain Celestial Group are likely to benefit in the near term.
Grocery Sales Soar in November
Growing demand from customers over the past year has led retailers to shift focus and they are now strengthening their e-commerce arm to boost online grocery sales. Shopping habits have changed drastically over the past year and people are more e-commerce dependent.
According to the latest Brick Meets Click/Mercatus Grocery Shopping Survey, the U.S. online grocery market grew 6% in November to a total of $8.6 billion in sales compared with $8.1 billion a year ago. Of these, $7.0 billion came from the pickup/delivery segments and $1.6 billion from ship-to-home.
The gains were primarily driven by a healthy increase in the active shopper base. The report further mentions that around 69 million U.S. households shopped for groceries online, jumping 16% year over year. One-third of the total monthly active users in November were between the age group of 30- and 40–year olds. Shoppers in this segment have grown 25% year over year.
The importance of pickup grew following the Covid-19 outbreak. This segment saw total dollar sales jumping 29% year over year.
Bright Future for Online Grocery
According to the U.S. Online Grocery Report 2022 released by Spryker Systems, an enterprise digital commerce platform, the online grocery market is poised to grow in the coming days. The report states that around 21% of Americans plan to buy most or all their grocery online by 2024.
The report further states that of the 2,500 surveyed, 77% plan to buy from big box retailers as they have a strong online arm. Moreover, 47% of Americans polled shop at least some of their groceries online, while more than 1 in 4 shoppers buy all their weekly groceries online.
Besides, the report shows that 34% of Americans spend more than $100 on buying groceries online every week. This gives a clear picture of how fast the online grocery segment is growing.
Also, the pandemic is far from over, with the Omicron variant of the coronavirus once again compelling states to reinstate restrictions and mask mandates. This will make people continue to depend on e-commerce for shopping given the safety aspects.
Besides, experts believe that e-commerce is here to stay as grocery players are fast shifting focus to the online business. Groceries are necessities and people will continue buying them.
Our Choices
Given this situation, investing in grocery stocks with a strong online presence should lead to solid returns going forward. We have picked four such stocks, each currently carrying either a Zacks Rank #1 (Strong Buy) or #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Costco sells high volumes of food and general merchandise (including household products and appliances) at discounted prices through membership warehouses. Costco is one of the largest warehouse club operators in the United States. COST also operates e-commerce websites in the United States, Canada, the United Kingdom, Mexico, Korea, Taiwan, Japan and Australia.
Costco’s expected earnings growth rate for the current year is 13.5%. The Zacks Consensus Estimate for current-year earnings has improved 5.7% over the past 60 days. Shares of COST have gained 4.6% in the past 30 days. Costco has a Zacks Rank #2.
United Natural Foods is the leading distributor of natural, organic and specialty food and non-food products in the United States and Canada. UNFI carries more than 1,10,000 high-quality natural, organic and specialty products, consisting of national, regional and private label brands in six product categories.
These categories are — grocery and general merchandise, produce, perishables and frozen foods, nutritional supplements and sports nutrition, bulk and foodservice products as well as personal care items. United Natural Foods has two principal divisions — the wholesale and the manufacturing and branded products unit.
United Natural Foods’ expected earnings growth rate for the current year is 7.7%. The Zacks Consensus Estimate for current-year earnings has improved 2.5% over the past 60 days. Shares of UNFI have advanced 38.9% over the past three months. United Natural Foods carries a Zacks Rank #2.
The Hain Celestial Group produces, distributes, markets, and sells various natural and organic foods as well as personal care products with operations in North America and Europe. HAIN offers popular better-for-you groceries (non-dairy beverages and frozen desserts, flour and baking mixes, cereals, condiments, cooking oils, infant and toddler food, etc.), snacks (potato and vegetable chips, organic tortilla style chips, whole grain chips and popcorn, etc.) and tea (include herb teas such as Lemon Zinger, Peppermint, Mandarin Orange Spice, Cinnamon Apple Spice, Red Zinger, etc.). The Hain Celestial Group is the largest manufacturer in the natural foods segment and has several leading brands.
The Hain Celestial Group’s expected earnings growth rate for the current year is 14.5%. The Zacks Consensus Estimate for current-year earnings has improved 4.4% over the past 60 days. Shares of HAIN have advanced 6.4% over the past three months. The Hain Celestial Group carries a Zacks Rank #2.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
Media Contact
Zacks Investment Research
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https://www.zacks.com
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.