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IDEXX (IDXX) Gains on CAG Sales, Global Growth Remains Robust

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On Dec 18, we issued an updated research report on IDEXX Laboratories, Inc. (IDXX - Free Report) . The company’s robust worldwide commercial capabilities and best-in-class products, including the next-generation chemistry analyzer, Catalyst One, would be key growth drivers in the days to come. The stock carries a Zacks Rank #2 (Buy), at present.

Over the past three months, this leading molecular diagnostic company has outperformed its industry. The stock has gained 51.9% compared with the 17.2% rise of the industry.

IDEXX exited the third quarter of 2020 with better-than-expected results. Solid organic-revenue growth is encouraging. The top line, in the quarter, was driven by stellar sales at the Companion Animal Group (CAG) and Livestock, Poultry and Dairy (LPD) businesses.

The company witnessed sturdy gains in CAG Diagnostics recurring revenues, supported by high organic gains in both U.S. and International markets during the July-September quarter. Further, the company’s human health business — OPTI Medical Systems’ COVID-19 human Polymerase Chain Reaction (“PCR”) testing — contributed to the top line. Management is also upbeat about the sustained strong recovery in pet healthcare. Margin expansions look encouraging.

IDEXX continues to demonstrate solid growth globally. International revenues in the third quarter were up 19% organically, aided by a 21% rise in CAG Diagnostics recurring revenues. It reflected robust gains across the United States as well as international markets. This growth in CAG Diagnostics recurring revenues resulted from strong gains across the company’s major modalities.

Global Reference Lab revenues increased 24% organically. Notably, the company’s newest reference lab in Kornwestheim, Germany, is fully functional now and is currently serving across Europe.

Nonetheless, the pandemic has limited the new CAG instrument placement levels, which is worrying. Dismal performance by the company’s Water segment is a deterrent as well. The company’s inability to provide any financial outlook is concerning.

Meanwhile, the majority of IDEXX’s consolidated revenues is derived from the sale of products in international markets. Thus, the strengthening of the U.S. dollar exchange rate, relative to other currencies, left a negative impact on revenues derived in currencies other than the U.S. dollar as well as on profits drawn from products manufactured in the United States and sold internationally.

Other Key Picks

Some other top-ranked stocks from the broader medical space are Merit Medical Systems, Inc. (MMSI - Free Report) , Align Technology, Inc. (ALGN - Free Report) and Thermo Fisher Scientific Inc. (TMO - Free Report) , each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Merit Medical has a projected long-term earnings growth rate of 12.6%.

Align Technology has an estimated long-term earnings growth rate of 18.3%.

Thermo Fisher has a projected long-term earnings growth rate of 18%.

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