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Here's Why You Should Invest in IDEXX Laboratories (IDXX) Now

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IDEXX Laboratories, Inc. (IDXX - Free Report) has been gaining investor confidence on consistently positive results. The stock has rallied 28.1% over the last year, ahead of the S&P 500’s 16% gain and the broader industry’s 24% rise.

Moreover, this leading manufacturer of products and services primarily for the companion animal veterinary, livestock and poultry has a market cap of $13.54 billion. The company’s five-year historical growth rate is also favorable at 15.9%, compared with 9.9% of the industry.

With solid prospects, this Zacks Rank #2 (Buy) stock is an attractive pick for investors at the moment.

The company’s estimate revision trend for the current year has been positive. In the last 60 days, six analysts revised their estimates upward, with no movement in the opposite direction. The estimate revision for earnings increased around 15.1% to $4.11 per share over the same time frame.

Per our Style Score, IDEXX Laboratories sports a Growth Score of A which is reflective of the company’s strong prospects.

 

 

Our research shows that stocks with a Growth Style Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best upside potential.

In this regard, IDEXX Laboratories has a favorable Net Margin (Net Income/Sales) of 13.4%, as against the industry’s negative 14.1%. The company’s sales to assets ratio of 1.19 versus the industry’s 0.64 signifies that it is a solid growth pick.

Let’s find out whether the recent positive trend is a sustainable one.

IDEXX exited the fourth quarter on a promising note. Strong year-over year growth in organic revenues is encouraging.

The stellar performance was driven by strong sales at the CAG business. In the fourth quarter, CAG organic revenues rose low double digits on strong CAG Diagnostics recurring organic revenue growth and VetLab consumables 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.

In this regard, we are optimistic about gains from the commercial launch of Catalyst SDMA Test in North America in January. With this, the company’s point-of-care customers will be able to add SDMA as an essential element to the routine chemistry panel. Continuing with the slew of developments, in January, IDEXX entered into a global agreement with a diagnostic company — Applied BioCode. Per the agreement, IDEXX will bring its Reference Laboratories customers the digital multiplex platform built by Applied BioCode. Management aims a commercial launch of this technology in 2019.

The companion animal market fundamentals remain solid with tremendous global runway for growth. Management’s innovation-based, multi-modality global strategy, accelerated recurring CAG Diagnostics revenue growth in the reported quarter. Moreover, strong top-line growth in the quarter was driven by considerable contributions from the rest of the business segments. Furthermore, a raised guidance for 2018 earnings per share instills confidence on the stock.

We are also upbeat about the company witnessing double-digit organic revenue growth in the international business. This reflected continued consumable revenue gains supported by Catalyst instrument base and average testing utilization.

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

Meanwhile, IDEXX’s high reliance on third-party distributors is a concern. Moreover, the competitive landscape in the domestic and overseas markets weighs on the company.

Other Key Picks

Other top-ranked stocks in the broader medical sector are PerkinElmer , Bio-Rad Laboratories (BIO - Free Report) and Becton, Dickinson and Company (BDX - Free Report) .

Bio-Rad Laboratories has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here. The company has a long-term expected earnings growth rate of 25%.

PerkinElmer has a long-term expected earnings growth rate of 12.3%. The stock carries a Zacks Rank #2.

Becton, Dickinson and Company has a Zacks Rank #2. The company has a long-term expected earnings growth rate of 13.3%.

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