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Bio-Rad Laboratories, Inc. (BIO - Free Report) posted third-quarter 2020 adjusted earnings per share (EPS) of $3, which surpassed the Zacks Consensus Estimate by 62.2%. Moreover, the bottom line rose 86.3% from the prior-year quarter.
The quarter’s adjustments eliminate the impacts of certain non-recurring items like asset amortization costs, legal charges, restructuring costs and acquisition-related one-time benefits.
GAAP EPS of the company was $43.64 per share in the quarter, up from the loss per share of $8.68 year over year.
Revenues in Detail
Bio-Rad’s revenues of $647.3 million in the quarter surpassed the Zacks Consensus Estimate by 14.5%. Moreover, revenues improved 15.5% from the year-ago quarter (up 14.9% at constant exchange rate or CER).
Per the company, an increased activity and lab utilization across its customers was registered across the globe. Further, along with strong demand for products associated with COVID-19 testing and related research, lower demand in the rest of the business was also observed during the quarter.
Segmental Analysis
Sales at the Life Science segment in the second quarter totaled $324 million, up 50.2% year over year and 48.8% at CER. The growth at CER was primarily driven by sales of Polymerase Chain Reaction (“PCR”) and Droplet Digital PCR and Process Media products. Geographically, the company’s quarterly growth at CER was experienced by all regions.
Net sales at the Clinical Diagnostics segment totaled $322.2 million, down 5.7% on a year-over-year basis and 5.9% at CER. The downside at CER was driven by lower demand due to the pandemic and was across most product lines as well as all regions.
BioRad Laboratories, Inc. Price, Consensus and EPS Surprise
In the quarter under review, Bio-Rad’s gross profit rose 19.6% to $367.3 million. Gross margin expanded 198 basis points (bps) to 56.7%. Per the company, adjusted gross margin was 57.5%, expanding 150 bps.
Operating expenses were $257.7 million in the third quarter, up 3.3% year over year. Operating profit totaled $109.6 million, reflecting a 90.7% upsurge from the prior-year quarter. Further, operating margin in the third quarter expanded 668 bps to 16.9%.
Company-adjusted operating margin was 18.8%, expanding 680 bps year over year.
Financial Update
Bio-Rad exited the third quarter with cash and cash equivalents (including short-term investments) of $1.16 billion compared with $1.04 billion at the end of the second quarter of 2020. Long-term debt (including current maturities) at the end of the third quarter was $438.9 million compared with $438.7 million.
Cumulative net cash flow from operating activities at the end of the quarter under review was $290.6 million compared with $298.1 million at the year-ago quarter’s end.
2020 Guidance
Although Bio-Rad continues to be uncertain about the duration and impact of the pandemic, the company expects a gradual return to pre-pandemic activity levels and business mix.
Bio-Rad expects full-year sales to be up 5.9-6.3% at CER year over year. Further, the Life Science segment is expected to grow by 27-28% at CER whereas the Clinical Diagnostics segment is likely to fall by 7% at CER for the year.
The company assumes that the fourth quarter will see a gradual improvement in non-COVID-19-related product sales and a smaller relative benefit of COVID-19-related product sales versus the third quarter.
Our Take
Bio-Rad exited the third quarter of 2020 with better-than-expected results. The company witnessed solid bottom-line growth in the quarter. Despite the negative impact of the pandemic, its Life Sciences segment registered growth on robust sale of products associated with the pandemic, thus providing some counterbalance. Further, strength in many of its key product lines across major geographic regions buoys optimism.
The uptick in core PCR and Droplet Digital PCR product revenues resulted from robust demand due to COVID-19 testing and related research. Continued momentum of the Droplet Digital PCR business looks encouraging. Notably, Bio-Rad launched two new PCR systems — the CFX Opus 96 and the CFX Opus 384 — last month. This strengthens the company’s global response and contribution to the fight against the pandemic, raising optimism on the stock. Expansion of the company’s gross margin is encouraging as well. Provision of the company’s full-year outlook looks encouraging.
However, decline in the company’s Clinical Diagnostics revenues is concerning.
Zacks Rank and Key Picks
Bio-Rad currently carries a Zacks Rank #3 (Hold).
Some other better-ranked stocks in the broader medical space are West Pharmaceutical Services, Inc. (WST - Free Report) , Thermo Fisher Scientific Inc. (TMO - Free Report) and Align Technology, Inc. (ALGN - Free Report) .
West Pharmaceutical reported third-quarter 2020 adjusted EPS of $1.15, beating the Zacks Consensus Estimate by 13.9%. Net revenues of $548 million outpaced the consensus estimate by 7.2%. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Thermo Fisher, a Zacks Rank #2 company, reported third-quarter 2020 adjusted EPS of $5.63, beating the Zacks Consensus Estimate by 28.8%. Revenues of $8.52 billion outpaced the consensus mark by 10%.
Align Technology reported reported third-quarter 2020 adjusted EPS of $2.25, surpassing the Zacks Consensus Estimate by a stupendous 281.4%. Net revenues of $734.1 million exceeded the Zacks Consensus Estimate by 38%. It currently flaunts a Zacks Rank #1.
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Bio-Rad (BIO) Q3 Earnings Surpass Estimates, Margins Rise
Bio-Rad Laboratories, Inc. (BIO - Free Report) posted third-quarter 2020 adjusted earnings per share (EPS) of $3, which surpassed the Zacks Consensus Estimate by 62.2%. Moreover, the bottom line rose 86.3% from the prior-year quarter.
The quarter’s adjustments eliminate the impacts of certain non-recurring items like asset amortization costs, legal charges, restructuring costs and acquisition-related one-time benefits.
GAAP EPS of the company was $43.64 per share in the quarter, up from the loss per share of $8.68 year over year.
Revenues in Detail
Bio-Rad’s revenues of $647.3 million in the quarter surpassed the Zacks Consensus Estimate by 14.5%. Moreover, revenues improved 15.5% from the year-ago quarter (up 14.9% at constant exchange rate or CER).
Per the company, an increased activity and lab utilization across its customers was registered across the globe. Further, along with strong demand for products associated with COVID-19 testing and related research, lower demand in the rest of the business was also observed during the quarter.
Segmental Analysis
Sales at the Life Science segment in the second quarter totaled $324 million, up 50.2% year over year and 48.8% at CER. The growth at CER was primarily driven by sales of Polymerase Chain Reaction (“PCR”) and Droplet Digital PCR and Process Media products. Geographically, the company’s quarterly growth at CER was experienced by all regions.
Net sales at the Clinical Diagnostics segment totaled $322.2 million, down 5.7% on a year-over-year basis and 5.9% at CER. The downside at CER was driven by lower demand due to the pandemic and was across most product lines as well as all regions.
BioRad Laboratories, Inc. Price, Consensus and EPS Surprise
BioRad Laboratories, Inc. price-consensus-eps-surprise-chart | BioRad Laboratories, Inc. Quote
Margins
In the quarter under review, Bio-Rad’s gross profit rose 19.6% to $367.3 million. Gross margin expanded 198 basis points (bps) to 56.7%. Per the company, adjusted gross margin was 57.5%, expanding 150 bps.
Operating expenses were $257.7 million in the third quarter, up 3.3% year over year. Operating profit totaled $109.6 million, reflecting a 90.7% upsurge from the prior-year quarter. Further, operating margin in the third quarter expanded 668 bps to 16.9%.
Company-adjusted operating margin was 18.8%, expanding 680 bps year over year.
Financial Update
Bio-Rad exited the third quarter with cash and cash equivalents (including short-term investments) of $1.16 billion compared with $1.04 billion at the end of the second quarter of 2020. Long-term debt (including current maturities) at the end of the third quarter was $438.9 million compared with $438.7 million.
Cumulative net cash flow from operating activities at the end of the quarter under review was $290.6 million compared with $298.1 million at the year-ago quarter’s end.
2020 Guidance
Although Bio-Rad continues to be uncertain about the duration and impact of the pandemic, the company expects a gradual return to pre-pandemic activity levels and business mix.
Bio-Rad expects full-year sales to be up 5.9-6.3% at CER year over year. Further, the Life Science segment is expected to grow by 27-28% at CER whereas the Clinical Diagnostics segment is likely to fall by 7% at CER for the year.
The company assumes that the fourth quarter will see a gradual improvement in non-COVID-19-related product sales and a smaller relative benefit of COVID-19-related product sales versus the third quarter.
Our Take
Bio-Rad exited the third quarter of 2020 with better-than-expected results. The company witnessed solid bottom-line growth in the quarter. Despite the negative impact of the pandemic, its Life Sciences segment registered growth on robust sale of products associated with the pandemic, thus providing some counterbalance. Further, strength in many of its key product lines across major geographic regions buoys optimism.
The uptick in core PCR and Droplet Digital PCR product revenues resulted from robust demand due to COVID-19 testing and related research. Continued momentum of the Droplet Digital PCR business looks encouraging. Notably, Bio-Rad launched two new PCR systems — the CFX Opus 96 and the CFX Opus 384 — last month. This strengthens the company’s global response and contribution to the fight against the pandemic, raising optimism on the stock. Expansion of the company’s gross margin is encouraging as well. Provision of the company’s full-year outlook looks encouraging.
However, decline in the company’s Clinical Diagnostics revenues is concerning.
Zacks Rank and Key Picks
Bio-Rad currently carries a Zacks Rank #3 (Hold).
Some other better-ranked stocks in the broader medical space are West Pharmaceutical Services, Inc. (WST - Free Report) , Thermo Fisher Scientific Inc. (TMO - Free Report) and Align Technology, Inc. (ALGN - Free Report) .
West Pharmaceutical reported third-quarter 2020 adjusted EPS of $1.15, beating the Zacks Consensus Estimate by 13.9%. Net revenues of $548 million outpaced the consensus estimate by 7.2%. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Thermo Fisher, a Zacks Rank #2 company, reported third-quarter 2020 adjusted EPS of $5.63, beating the Zacks Consensus Estimate by 28.8%. Revenues of $8.52 billion outpaced the consensus mark by 10%.
Align Technology reported reported third-quarter 2020 adjusted EPS of $2.25, surpassing the Zacks Consensus Estimate by a stupendous 281.4%. Net revenues of $734.1 million exceeded the Zacks Consensus Estimate by 38%. It currently flaunts a Zacks Rank #1.
Have You Seen Zacks’ 2020 Election Stock Report?
The upcoming election could be a massive buying opportunity for savvy investors. Trillions of dollars will shift into new market sectors after the election. The question is, which sectors will soar for each candidate? Zacks has put together a new special report to help readers like you target big profits.
The 2020 Election Stock Report reveals specific stocks you’ll want to own immediately after the results are announced – 6 if Trump wins, 6 if Biden wins. Past election reports have led investors to gains of +71%, +83%, even +185% in the following months. This year’s picks could be even more lucrative.
Check out Zacks’ 2020 Election Stock Report >>