For Immediate Release
Chicago, IL – April 5, 2021 – Zacks Equity Research Shares of Logitech International S.A. (
LOGI Quick Quote LOGI - Free Report) as the Bull of the Day, Harley-Davidson, Inc. ( HOG Quick Quote HOG - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Fulgent Genetics, Inc. ( FLGT Quick Quote FLGT - Free Report) , Bio-Rad Laboratories, Inc. ( BIO Quick Quote BIO - Free Report) and IDEXX Laboratories, Inc. ( IDXX Quick Quote IDXX - Free Report) .
Here is a synopsis of all five stocks:
Logitech has been an enormous beneficiary of the stay-at-home environment. Its sales exploded this past year as the world scrambles to function remotely. Logitech's best-in-class portfolio of webcams, gaming accessories, computer mouse, digital audio equipment, and other digital accessories was in extraordinarily high demand amid the pandemic.
There has been some concern that Logitech was a 'one-trick pony' of returns during the global lockdowns, but I couldn't disagree more. The world economy will be working more mobile than ever in the
New Normal as managers realize productivity improvements in remote working environments. LOGI corrected nearly 25% from its February highs to the March lows and remains 10% below its peak.
Logitech has been able to produce accelerating topline growth throughout 2020. This enterprise is expected to sum up its fiscal 2021 year (which ended 3/31/21) with sales growth of 57-60% and a record operating income of $1.05 billion. The business has never experienced growth like this in its nearly 2-decade history as a public company, and this secular shift to remote functionality will continue to be a tailwind that fills Logitech's sails in the years to come.
Analysts have been increasingly optimistic about this digital powerhouse's future, raising price targets and EPS estimates across all time horizons propelling LOGI into a Zacks Rank #1 (Strong Buy).
Over the years, Logitech has been best known for its gaming & computer accessory (aka mouse and keyboard) segments, which made up over 60% of its topline in the pre-pandemic world. Despite the company's relatively lackluster pre-pandemic revenue growth, it had been able to produce expanding margins with its (non-GAAP) profitability appreciating in the double digits since 2016, illustrating operational excellence.
The global quarantine environment drove Logitech's highly diverse portfolio to the next level. Throughout the pandemic the business has experienced accelerating sales improvements each quarter, and analysts anticipate this will continue into 2021.
Over the past year, the largest growth drivers for the enterprise have been their best-in-class webcams (which I was fortunate to acquire after a 4-week backorder due to excess demand), which more than quadrupled in year-over-year sales this past quarter, along with tablet accessories which saw similar growth figures. The remote worker wants to be able to work with the full functionality of being in the office but ubiquitously, which has driven these segments to record heights.
Gaming continues to be the leading sales driver for Logitech, with the global quarantine compelling more engagement in this type of digital entertainment. This segment has already outpaced last year's full-year fiscal revenue (fiscal year ending at the end of March) by 33%, with Q4 yet to be reported.
Logitech has been illustrating consistently growing cash flows for the past 5 years, which has led to the business being flush in cash & equivalents as of the latest reported quarter. The enterprise is completely funded by internal operations with no debt in the books.
The business has an enormous amount of financial flexibility for potential acquisitions and organic growth projects.
New Normal's consumption trends are going to look a lot more like what we saw during the pandemic than in the pre-pandemic economy. The spending trends on digital technology for remote functionality will continue, and Logitech's diverse portfolio of best-in-class tech will continue to propel growth.
4 out of 6 analysts are calling this stock a buy today, with no sell ratings. Price targets represent an upside as high as 25% from where the stock is trading at today.
Harley-Davidson has been the symbol of the mid-life crisis for decades and has profited off the Baby Boomers, but there is a new group of consumers in town and their set of demands are shifting. The Chopper is going out of style and, unfortunately, leading its progenitor Harley-Davidson out with it. Analysts continue to pessimistically lower its already deflated EPS estimates for this seemingly antiquated stock, pushing HOG down to a Zacks Rank #5 (Strong Sell). The End of an Era
Harley-Davidson hit its peak sales and profitability in 2014 and has since been experiencing a decline. The massive demographic shift in consumption is catalyzing this demand slump. Millennials recently overtook Boomers as the largest consuming generation, and they are making some profound changes to the retail landscape (e.g., the retail apocalypse). One of the unfortunate victims of this consumption change has been Harley and its iconic motorcycles.
This is not to say Harley isn't making an effort to shape their brand image around the evolving consumer. The company has come out with a line of fully electric bikes and has a pipeline of sleek new designs and an eBicycle, which are to be released next year.
These brand-changing efforts may be fruitless as millennials and younger generations turn against some of the brands of their parents' and grandparents' generations as they are no longer "fashionable." Unfortunately, I don't believe Harley will be able to shake its chopper brand association quickly.
COVID, Financials & Chart
Harley has experienced 9 straight quarters of topline declines, with its profits tumbling from $254 million in the second quarter of 2018 to a ($68) million decline this past quarter. COVID-19 pummeled Harley's sales and drove the company's bottom line to its lowest level in the company's public history.
This most recent recession was very different from the systemic financial downfall, and I would have thought Harley Davidson would have fared much better in this medically induced recession.
With mortality at the forefront of many consumers' minds, I think there is more demand for "exciting" purchases like Teslas and Malibu Boats, with their respective stocks reaching all-time highs this year.
This stock's drop accentuates the downward trend HOG has been experiencing since mid-2014, and its all-time high remains in 2006. HOG is trading nearly 50% below that high. The stock has seen a recent boost on the implication of a recovery trade. HOG has marginally recovered to pre-COVID levels, despite its earning estimates not projecting to reach its 2019 levels for years.
Now is the time to pull profits off this mature Baby Boomer brand that is on its way out without significant system changes in its brand recognition. HOG has more than doubled since its 2020 bottom, and it's time to pull those profits.
People are no longer excited about Harley's anymore. The business appears to be hitting a level of obsolescence as it looks at its glory days in the rearview mirror. The risk of this stock outweighs the reward with HOG trading at a 5 year high P/E multiple.
There is still a glimmer of hope that this motorcycle giant will be able to rebrand itself into something millennial-friendly. The success of this year's product releases will be telling in whether the company can evolve with the progressing consumer.
Additional content: Covid Resurgence Accelerates Diagnostic Testing: 3 Top Picks
The pandemic-hit investment world, during the process of finding COVID-proof profitable sectors, has by now recognized MedTech's unabated and nuanced growth trend. During the pre-pandemic era, this sector, with limited success history, was never one for big betting. COVID-19 challenges however have changed the investment landscape, making MedTech one of the safest and profitable hunting grounds for investors.
The MedTech sector started witnessing a steady rebound from the second half of 2020, thanks to a number of positive developments, including a series of COVID-19 diagnostic test launches and a large-scale shift of consumer preference toward digital healthcare options. The solid uptick in the non-COVID product portfolio and emergency medical services also aided the fast recovery of the sector.
COVID-19 Testing Demand Continues in 2021
It was initially thought that with mass-scale vaccine rollout, COVID-19 testing makers will gradually lose their ground. However, with the renewed wave of coronavirus cases along with emergence of new mutant strains, diagnostic laboratories are once again overwhelmed by the enormous pressure of developing COVID-19 test kits.
Earlier this year, the Centers for Disease Control and Prevention (CDC) had announced that The Department of Health and Human Services (HHS) will offer more than $22 billion of funding to states, localities, and territories to support the nation's response to the COVID-19 pandemic. This is as directed by the Coronavirus Response and Relief Supplemental Appropriations Act.
From this amount, $19 billion will be used to support testing, contract tracing, surveillance, containment, and mitigation to monitor and suppress the spread of COVID-19.
Not only this, the President's recently-passed $1.9 trillion American Rescue Plan includes $400 billion of funding for critical measures to slow down the spread of the infection.
Federal Tie-Ups With Testing Companies
At this point, government representatives are going all out to increase the nation's testing capacity and forming federal-private tie ups to increase COVID-19 testing volume. Abbott recently completed its promised supply of 150 million BinaxNOW COVID-19 tests to the government. In a major development earlier this week, this rapid antigen self test received the FDA's Emergency Use Authorization (EUA) for over-the-counter, non-prescription, asymptomatic use.
Quest Diagnostics in January 2020 entered into a mega-testing deal to aid public health response to COVID-19. This public and private collaboration is expected to help CDC to come up with a large-scale longitudinal genomic survey of the SARS-CoV-2 virus using Quest Diagnostics' COVID-19 testing data and patient samples across the United States.
BD (Becton, Dickinson) announced a $24 million investment in August 2020 by the Department of Defense (DOD) in collaboration with the HHS to support the scale up of U.S. manufacturing capabilities for BD Veritor Solution for Rapid Detection of SARS-CoV-2. Later in November, BD received an order from the government of Canada for 7.6 million tests through March 2021 to support the country's planning of an advanced COVID-19 testing strategy.
Best Diagnostic Testing Stocks to Buy Now
The above developments show that there couldn't be a better time to invest in diagnostic testing stocks. We have narrowed down our search to the following stocks based on a favorable Zacks Rank and strong prospects for 2021.
Fulgent Genetics: Fulgent was recognized as the #1 provider of COVID-19 tests in California by the California Department of Public Health in late January, processing the highest volume in tests. In terms of COVID-19 testing capabilities, the company noted that its tests have been detecting all major mutations of the virus.
For 2021, the Zacks Consensus Estimate for revenues indicates an improvement of 90.1% from the prior-year period. In the past year, this Zacks Rank #1 (Strong Buy) company shares have gained 863.3%, outperforming the
Medical industry's rally of 22.5%.
You can see
the complete list of today's Zacks #1 Rank stocks here. Bio-Rad Laboratories: The company is consistently witnessing an uptick in polymerase chain reaction (PCR), Droplet Digital PCR (ddPCR) and Process Media product revenues, resulting from robust demand due to COVID-19 testing and related research. Continued momentum of the ddPCR business looks encouraging.
The recent receipt of the FDA's EUA for COVID-19, influenza A and influenza B RT-PCR (Reverse transcription PCR) syndromic multiplex test along with another EUA for the company's COVID RT-PCR assay kit (obtained in January this year) look encouraging.
For 2021, the Zacks Consensus Estimates for revenues and earnings indicates an improvement of 5.2% and 6.9% respectively from the prior-year period. Year to date, this Zacks Rank #2 (Buy) company's shares have gained 58.3%.
IDEXX Laboratories: The company's human health business, OPTI Medical Systems' COVID-19 human PCR testing is currently strongly contributing to its top line. Further, amid the pandemic-led restrictions, IDEXX is witnessing a sequential improvement in Companion Animal Group instrument placements.
For 2021, the Zacks Consensus Estimates for revenues and earnings indicates an improvement of 14.3% and 13.1% respectively from the prior-year period. Over the past year, this Zacks Rank #2 company's shares have gained 104.1%.
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