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Here's Why You Should Hold on to QIAGEN (QGEN) Stock for Now

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QIAGEN N.V. (QGEN - Free Report) has been gaining on robust segmental growth. Its international performance has also been impressive. Strong revenues in the third quarter of 2020 buoy optimism. However, downsides may result from its reliance on commercial relationships and a stiff competitive landscape.

Over the past year, this Zacks Rank #3 (Hold) stock has gained 12.7% compared with 8% growth of the industry and 16.6% rise of the S&P 500.

The renowned molecular diagnostics solutions provider has a market capitalization of $10.58 billion. The company projects 16.5% growth for the next five years and expects to maintain strong segmental performance. The company surpassed estimates in two of the trailing four quarters, missed the same in one and broke even in another, the average surprise being 2.92%.

 

Let’s delve deeper.

Impressive Q3 Results: QIAGEN’s robust bottom and top lines in the third quarter of 2020 instill optimism. Revenue growth across  its geographies and operating segments in the third quarter was impressive. QIAGEN’s expansion of the NGS suite and purchase of the remaining shares of NeuMoDx Molecular look encouraging. Strength in customer adoption of QIAcuity digital polymerase chain reaction (“PCR”) system and robust placements of new QIAcubeConnect and the QIAcube HT high-throughput version are added positives. Adjusted operating margin expansion and a raised full-year outlook are impressive.

Product Launches: We are upbeat about QIAGEN’s recent product launches. The company, this month, started commercialization of a portable digital test — QIAreach SARS-CoV-2 Antigen Test — in the United States, to aid laboratories in detecting SARS-CoV-2 antigens in people with active infections in lesser time. Also, in the same month, QIAGEN announced the European launch of the NeuMoDx Flu A-B/RSV/SARS-CoV-2 Vantage Test to identify influenzas A and B, respiratory syncytial virus (“RSV”) and SARS-CoV-2 infections.

In October, the company announced its plans to launch a straightforward approach to viral RNA epidemiology — QIAprep& Viral RNA UM Kit — to simplify and accelerate PCR analysis and remove key testing bottlenecks for SARS-CoV-2 and other RNA viruses.

In August, QIAGEN announced the U.S. launch of the QIAreach Anti-SARS-CoV-2 Total Test.

Huge Potential in Molecular Diagnostics: We are optimistic about the strong performance of QIAGEN’s molecular diagnostic portfolio. The company was able to place 290 new placements of the QIAsymphony automation system due to a robust demand for sample preparation instruments. In the QIAcube family of instruments, placements of new QIAcube Connect (more than 800 instruments) and the QIAcube HT high-throughput version (more than 250 instruments) were both strong.

During the third quarter, the company registered higher sales of the QIAstat-Dx and NeuMoDx systems and other PCR products that include the Rotor-Gene Q PCR cycler and related consumables.

Downsides

Reliance on Commercial Relationships: The future level of sales for companion diagnostics depends to a high degree on the commercial success of the related medicines for which the tests have been designed. Further, risks remain that it may be unable to maintain these relationships and its collaborative partners may pursue or develop competing products or technologies, either on their own or in collaboration with others.

Stiff Competition: QIAGEN is facing intensifying competition from firms providing pre-analytical solutions and other products used by QIAGEN’s customers. The markets for some of the company’s products are very competitive and price sensitive as well.

Estimates Trend

QIAGEN has been witnessing an upward estimate revision trend for 2020. Over the past 90 days, the Zacks Consensus Estimate for its earnings has moved 2.5% north to $2.07.

The Zacks Consensus Estimate for fourth-quarter 2020 revenues is pegged at $523.3 million, suggesting 26.6% rise from the year-ago reported number.

Key Picks

Some better-ranked stocks from the broader medical space are ResMed Inc. (RMD - Free Report) , Thermo Fisher Scientific Inc. (TMO - Free Report) and Align Technology, Inc. (ALGN - Free Report) .

ResMed’s long-term earnings growth rate is estimated at 14.5%. The company presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Thermo Fisher’s long-term earnings growth rate is estimated at 18%. It currently carries a Zacks Rank #2.

Align Technology’s long-term earnings growth rate is estimated at 18.3%. It currently carries a Zacks Rank #2.

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