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IDEXX Laboratories Global Growth Solid amid Currency Woes

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On May 29, we issued an updated research report on leading molecular diagnostic company, IDEXX Laboratories, Inc. (IDXX - Free Report) . The stock currently has a Zacks Rank #2 (Buy).

In the last three months, IDEXX Laboratories has been trading above the Zacks categorized Medical - Instruments industry. The company’s better-than-expected first-quarter 2017 performance has bolstered market confidence leading to a further rally in the share price.

We expect this bullish trend to continue in the days ahead. As per the last share price movement, the stock has gained 15.7% in the period, significantly ahead of the broader industry’s gain of 7.6%.

We are encouraged to note that IDEXX continues to demonstrate solid global growth on strong international expansion. International revenues in the first quarter of 2017 grew low double digits organically driven by a 17% organic rise in CAG Diagnostics recurring revenues. This reflected continued consumable revenue gains supported by strong Catalyst instrument customer base and average testing utilization.

IDEXX derives the lion’s share of its revenues from its Companion Animal Group segment (CAG). In the first quarter, CAG revenues rose double digits on a year-over-year basis, supported by CAG Diagnostics recurring organic as well as CAG instrument revenue growth.

Also, we are optimistic about the company’s recent inclusion in the NASDAQ-100 Index, the NASDAQ-100 Equal Weighted Index and the NASDAQ-100 Ex Technology Index. It has also been listed under the coveted S&P 500 which proves that the company has been performing consistently well over the past few years.

On the flip side, foreign exchange headwinds continue to remain a major dampener for the company’s international performance. Moreover, a competitive landscape in the overseas market weighs on IDEXX. Also, over the last three months, a comparative study of the company’s forward P/E (F12M basis) multiple reflected that the stock has been quite overvalued as compared to the broader industry.

Other Key Picks

Other top-ranked stocks in the broader medical sector are Luminex Corporation , Inogen, Inc. (INGN - Free Report) and Edwards Lifesciences Corporation (EW - Free Report) . Notably, Luminex and Inogen sport a Zacks Rank #1 (Strong Buy), while Edwards Lifesciences carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Luminex has an expected long-term adjusted earnings growth of almost 16.3%. The stock added roughly 8.9% over the last three months.

Inogen has a long-term expected earnings growth rate of 17.5%. The stock has a solid one-year return of roughly 84.2%.

Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. The stock added roughly 22% over the last three months.

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