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Bear of the Day: Abaxis (ABAX)

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Abaxis ABAX develops, manufactures, markets, and sells portable blood analysis systems for use in human or veterinary patient care settings to provide rapid blood constituent measurements for clinicians worldwide. A miss on earnings and weakness in the sector due to a Trump presidency is making investors nervous. For these reasons Abaxis is the Bear of the Day after falling to a Zacks Rank #5 (Strong Sell).

The company has a market cap of $1.1 Billion with a PE of 38. The stock has Zacks Style Scores of “F” in Value and “D” in Growth. The company resides in an industry ranked 65 out of 265 (Top 25%) of the Zacks Industry Rank. However, the threat to Obamacare is a threat to medical device makers and the sector could suffer under Trump.

Earnings and Outlook

On October 25th, Abaxis reported earnings that caused the stock to fall 10%. The second quarter EPS came in at $0.34 versus the $0.36 expected, with revenues coming in below the $61.4 million expected at $58.6 million. 

CEO Clinton Severson reviewed the quarter: "The results for Q2 continued to build on the progress achieved in Q1. Medical market revenues increased 9% and veterinary market revenues grew by 4%, compared to the same period last year. Consumables sales accounted for 78% of total revenues and increased by 9% during the quarter, compared to the same period last year. Additionally, we achieved international sales growth of 7% over the same period last year. We were particularly pleased with revenue growth of 19% in medical reagent discs over the same period last year and unit sales of medical reagent discs now account for 40% of total reagent disc unit sales.

While the tone was upbeat, traders sold the stock aggressively lower, to levels not seen since July. The stock has recovered half its losses, but investors might want to get out here as estimate revisions are headed lower.

Estimates Falling

Over the last month estimates have fallen for both the current year and next year. In addition, analysts are in full agreement in bringing down the numbers with a total of seven revision lower over for both 2017 and 2018.

For 2017, estimates have fallen 3% from $1.35 to $1.31. For 2018, there has been a 4.6% drop from $1.57 to $1.50. Abaxis will next report January 26th, expect the stock to remain week into the report as it could see its third straight miss on EPS.

A Better option

Baxter (BAX - Free Report) isZacks Rank #1 (Strong Buy)and a smarter choice than Abaxis.The companymanufacture and distributes a diversified line of health care products.  Analysts have been revising estimates higher over the last month, for both fiscal years 2016 and 2017. In addition, the stock hasn’t missed on EPS in over four years.  

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