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Here's Why You Should Add IDEXX (IDXX) to Your Portfolio Now
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IDEXX Laboratories, Inc. (IDXX - Free Report) has been gaining on strength in the Companion Animal Group (CAG) business and robust global performance despite pandemic-led disruption. The company’s better-than expected results in the fourth quarter of 2020 buoys optimism. However, downsides may result from a weak capital structure and foreign exchange fluctuation.
Over the past year, shares of this Zacks Rank #2 (Buy) company have outperformed the industry. Shares of the company have surged 129.1% compared with 54.7% growth of the industry and 68.6% rise of the S&P 500.
The renowned manufacturer of products and services, primarily for the companion animal veterinary, livestock and poultry, has a market cap of $43.80 billion. The company projects 15.8% growth for the next year and expects to maintain strength in its CAG business. The company surpassed estimates in the trailing four quarters, the average surprise being 26.95%.
Let’s delve deeper.
Impressive Q4 Results: We are upbeat about IDEXX’s fourth-quarter 2020 results. The company witnessed solid organic revenue growth driven by strong CAG and Livestock, Poultry and Dairy (LPD) businesses. The company’s human health business - OPTI Medical operating segment also contributed to the top line. Performance in major geographies and sustained strong global trends in pet healthcare in the last-reported quarter instill investor confidence in the stock.
Strong Global Performance: We are optimistic about IDEXX’s continued solid growth globally. International revenues in the fourth quarter of 2020 were up 16.5% organically, aided by a 21% rise in CAG Diagnostics recurring revenues. This reflected robust gains across the United States as well as international markets. Moreover, Global Reference Lab revenues increased 18.9% organically, reflecting nearly 20% growth in the United States and mid-to-high teens organic gains in international markets.
Continued CAG Growth: IDEXX is raising optimism over the stock by deriving the lion’s share of revenues from the CAG segment. Continued strength in clinical visits and increased utilization of diagnostics aided CAG Diagnostics’ recurring revenues during the fourth quarter. Organically, CAG revenues rose 17% year over year driven by solid growth in global CAG Diagnostics recurring revenues. Further, IDEXX witnessed a sequential improvement in CAG instrument placements during the fourth quarter amid pandemic-led restrictions.
However, downsides might result from IDEXX deriving majority of consolidated revenues from sale of products in international markets. Thus, the strengthening of the rate of exchange for the U.S. dollar relative to other currencies had a negative impact on the company’s revenues derived in currencies other than the U.S. dollar.
IDEXX’s weak solvency and capital structure are concerning as well. The company’s total debt was $908.5 million for the fourth quarter, reflecting a noticeable increase from $903 million in the preceding quarter. This figure, however, was much higher than the year-end cash and cash equivalent of $383.9 million.
Estimate Trends
IDEXX has been witnessing a positive estimate revision trend for the current year. Over the past 90 days, the Zacks Consensus Estimate for its earnings has moved 11.2% north to $7.59.
The Zacks Consensus Estimate for its first-quarter 2021 revenues is pegged at $739.2 million, suggesting 18% growth from the year-ago reported number.
Other Key Picks
A few other similar-ranked stocks from the broader medical space are Bioanalytical Systems, Inc. , Cantel Medical Corp. and ConforMIS, Inc. , each carrying a Zacks Rank #2. You can see the complete list of Zacks #1 Rank (Strong Buy) stocks here.
Bioanalytical Systems has a projected long-term earnings growth rate of 15%.
Cantel Medical has a projected long-term earnings growth rate of 19%.
ConforMIS has an estimated long-term earnings growth rate of 42%.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Here's Why You Should Add IDEXX (IDXX) to Your Portfolio Now
IDEXX Laboratories, Inc. (IDXX - Free Report) has been gaining on strength in the Companion Animal Group (CAG) business and robust global performance despite pandemic-led disruption. The company’s better-than expected results in the fourth quarter of 2020 buoys optimism. However, downsides may result from a weak capital structure and foreign exchange fluctuation.
Over the past year, shares of this Zacks Rank #2 (Buy) company have outperformed the industry. Shares of the company have surged 129.1% compared with 54.7% growth of the industry and 68.6% rise of the S&P 500.
The renowned manufacturer of products and services, primarily for the companion animal veterinary, livestock and poultry, has a market cap of $43.80 billion. The company projects 15.8% growth for the next year and expects to maintain strength in its CAG business. The company surpassed estimates in the trailing four quarters, the average surprise being 26.95%.
Let’s delve deeper.
Impressive Q4 Results: We are upbeat about IDEXX’s fourth-quarter 2020 results. The company witnessed solid organic revenue growth driven by strong CAG and Livestock, Poultry and Dairy (LPD) businesses. The company’s human health business - OPTI Medical operating segment also contributed to the top line. Performance in major geographies and sustained strong global trends in pet healthcare in the last-reported quarter instill investor confidence in the stock.
Strong Global Performance: We are optimistic about IDEXX’s continued solid growth globally. International revenues in the fourth quarter of 2020 were up 16.5% organically, aided by a 21% rise in CAG Diagnostics recurring revenues. This reflected robust gains across the United States as well as international markets. Moreover, Global Reference Lab revenues increased 18.9% organically, reflecting nearly 20% growth in the United States and mid-to-high teens organic gains in international markets.
Continued CAG Growth: IDEXX is raising optimism over the stock by deriving the lion’s share of revenues from the CAG segment. Continued strength in clinical visits and increased utilization of diagnostics aided CAG Diagnostics’ recurring revenues during the fourth quarter. Organically, CAG revenues rose 17% year over year driven by solid growth in global CAG Diagnostics recurring revenues. Further, IDEXX witnessed a sequential improvement in CAG instrument placements during the fourth quarter amid pandemic-led restrictions.
However, downsides might result from IDEXX deriving majority of consolidated revenues from sale of products in international markets. Thus, the strengthening of the rate of exchange for the U.S. dollar relative to other currencies had a negative impact on the company’s revenues derived in currencies other than the U.S. dollar.
IDEXX’s weak solvency and capital structure are concerning as well. The company’s total debt was $908.5 million for the fourth quarter, reflecting a noticeable increase from $903 million in the preceding quarter. This figure, however, was much higher than the year-end cash and cash equivalent of $383.9 million.
Estimate Trends
IDEXX has been witnessing a positive estimate revision trend for the current year. Over the past 90 days, the Zacks Consensus Estimate for its earnings has moved 11.2% north to $7.59.
The Zacks Consensus Estimate for its first-quarter 2021 revenues is pegged at $739.2 million, suggesting 18% growth from the year-ago reported number.
Other Key Picks
A few other similar-ranked stocks from the broader medical space are Bioanalytical Systems, Inc. , Cantel Medical Corp. and ConforMIS, Inc. , each carrying a Zacks Rank #2. You can see the complete list of Zacks #1 Rank (Strong Buy) stocks here.
Bioanalytical Systems has a projected long-term earnings growth rate of 15%.
Cantel Medical has a projected long-term earnings growth rate of 19%.
ConforMIS has an estimated long-term earnings growth rate of 42%.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2021 today >>