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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 seeing sturdy gains in CAG Diagnostics’ recurring revenues, supported by sustained strength in global pet healthcare trends. Solid international performance buoys optimism. However, a weak capital structure and foreign exchange fluctuation remain concerns.
Over the past year, shares of this Zacks Rank #2 (Buy) company have outperformed the industry. Shares of the company have surged 81.4% compared with 20.4% growth of the industry and 36.9% 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 $57.29 billion. The company projects 19.9% growth for the next five years. The company surpassed estimates in the trailing four quarters, the average surprise being 28.16%.
Let’s delve deeper.
CAG Continues to Perform Well Despite Coronavirus: IDEXX derives the lion’s share of its revenues from the CAG segment. The company registered stellar second-quarter revenue growth within CAG.
In the second quarter, CAG revenues rose 32% (up 27% organically) year over year, driven by 30% reported and 26% organic growth in global CAG Diagnostics recurring revenues. This uptick in overall CAG revenues reflects 24% organic growth in the United States and 30% organic growth in international markets. Continued strength in clinical visits and related diagnostic products and services in the reported quarter aided CAG Diagnostics’ recurring revenues.
Image Source: Zacks Investment Research
Strong Global Performance: IDEXX continues to demonstrate solid growth globally. International revenues in the second quarter of 2021 rose 23.1% organically, aided by a 27.4% rise in CAG Diagnostics recurring revenues. This reflected robust gains in the United States as well as international markets.
Global Reference Lab revenues increased 25% organically, reflecting more than 20% organic growth in the United States and 30% rise in international markets. The international reference lab gains were driven by strong growth in Europe, supported by IDEXX’s new German core lab capability, the company’s expanded commercial presence and growth in IDEXX 360 program agreements. High same-store volume growth along with strong gains across testing categories continued to drive global reference lab revenues.
Raised Guidance: IDEXX, boosted by the ongoing business recovery and strong quarterly performance, has raised its financial outlook for 2021. The company projects revenues for the year in the range of $3,170-$3,205 million, suggesting year-over-year growth of 17-18.5% on a reported and 14.5-16% on an organic basis. This is significantly up from the previously-provided financial outlook where revenue growth was projected at $3,105-$3,160 million.
Further, IDEXX projects full-year earnings per share in the range of $8.20-$8.36, indicating growth of 22-25% on a reported basis (up from the earlier outlook of $7.88-$8.18).
However, IDEXX derives a majority of its consolidated revenues from the sale of products in international markets. Thus, the strengthening of the rate of exchange for the U.S. dollar relative to other currencies affected 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 $905.1 million for the second quarter, reflecting an increase from $903.7 million in the preceding quarter. This figure, however, was much higher than the year-end cash and cash equivalent of $232.1 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 4.6% north to $8.35.
The Zacks Consensus Estimate for its third-quarter 2021 revenues is pegged at $793.3 million, suggesting 9.9% growth from the year-ago reported number.
Image: Bigstock
Here's Why You Should Add IDEXX (IDXX) to Your Portfolio Now
IDEXX Laboratories, Inc. (IDXX - Free Report) has been seeing sturdy gains in CAG Diagnostics’ recurring revenues, supported by sustained strength in global pet healthcare trends. Solid international performance buoys optimism. However, a weak capital structure and foreign exchange fluctuation remain concerns.
Over the past year, shares of this Zacks Rank #2 (Buy) company have outperformed the industry. Shares of the company have surged 81.4% compared with 20.4% growth of the industry and 36.9% 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 $57.29 billion. The company projects 19.9% growth for the next five years. The company surpassed estimates in the trailing four quarters, the average surprise being 28.16%.
Let’s delve deeper.
CAG Continues to Perform Well Despite Coronavirus: IDEXX derives the lion’s share of its revenues from the CAG segment. The company registered stellar second-quarter revenue growth within CAG.
In the second quarter, CAG revenues rose 32% (up 27% organically) year over year, driven by 30% reported and 26% organic growth in global CAG Diagnostics recurring revenues. This uptick in overall CAG revenues reflects 24% organic growth in the United States and 30% organic growth in international markets. Continued strength in clinical visits and related diagnostic products and services in the reported quarter aided CAG Diagnostics’ recurring revenues.
Strong Global Performance: IDEXX continues to demonstrate solid growth globally. International revenues in the second quarter of 2021 rose 23.1% organically, aided by a 27.4% rise in CAG Diagnostics recurring revenues. This reflected robust gains in the United States as well as international markets.
Global Reference Lab revenues increased 25% organically, reflecting more than 20% organic growth in the United States and 30% rise in international markets. The international reference lab gains were driven by strong growth in Europe, supported by IDEXX’s new German core lab capability, the company’s expanded commercial presence and growth in IDEXX 360 program agreements. High same-store volume growth along with strong gains across testing categories continued to drive global reference lab revenues.
Raised Guidance: IDEXX, boosted by the ongoing business recovery and strong quarterly performance, has raised its financial outlook for 2021. The company projects revenues for the year in the range of $3,170-$3,205 million, suggesting year-over-year growth of 17-18.5% on a reported and 14.5-16% on an organic basis. This is significantly up from the previously-provided financial outlook where revenue growth was projected at $3,105-$3,160 million.
Further, IDEXX projects full-year earnings per share in the range of $8.20-$8.36, indicating growth of 22-25% on a reported basis (up from the earlier outlook of $7.88-$8.18).
However, IDEXX derives a majority of its consolidated revenues from the sale of products in international markets. Thus, the strengthening of the rate of exchange for the U.S. dollar relative to other currencies affected 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 $905.1 million for the second quarter, reflecting an increase from $903.7 million in the preceding quarter. This figure, however, was much higher than the year-end cash and cash equivalent of $232.1 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 4.6% north to $8.35.
The Zacks Consensus Estimate for its third-quarter 2021 revenues is pegged at $793.3 million, suggesting 9.9% growth from the year-ago reported number.
Other Key Picks
A few other similar-ranked stocks from the broader medical space are Envista Holdings Corporation (NVST - Free Report) , BellRing Brands, Inc. (BRBR - Free Report) and Biolase, Inc. (BIOL - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of Zacks #1 Rank (Strong Buy) stocks here.
Envista Holdings has an estimated long-term earnings growth rate of 27%.
BellRing Brands has an estimated long-term earnings growth rate of 29%.
Biolase has a projected long-term earnings growth rate of 15%.