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Here's Why You Should Retain QIAGEN (QGEN) Stock for Now

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QIAGEN N.V. (QGEN - Free Report) is well-poised for improvement in the coming months, backed by its focus to drive international growth. The robust revenue increase across all geographies and in the Molecular Diagnostics arm buoys optimism. However, competitive headwinds and foreign exchange woes remain concerning.

Over the past year, the Zacks Rank #3 (Hold) stock has lost 9.6% compared with a 39.2% decline of the industry and a 6.2 % fall of the S&P 500.

The renowned provider of sample to insight solutions has a market capitalization of $9.99 billion. The company’s long-term expected growth is at 13.3% compared with the industry’s growth projection of 18.6%.

Riding on current business growth and bullish near-term prospects, the company is worth holding on to.

Factors at Play

International Focus to Drive Growth: QIAGEN currently markets products in more than 100 countries. In the quarter under review, revenues from Europe, the Middle East and Africa (40% of sales) rose 14% reportedly (up 24% at CER), led by double-digit CER growth in Germany, Spain and the Netherlands.

Revenues from the Asia-Pacific/ Japan (20% of sales) rose 21% year over year on a reported basis (up 25% at CER). Sales in this region were led by China, which registered more than 10% CER growth on strong demand trends for consumables and bioinformatics solutions.

In addition, countries like Australia, India and South Korea posted strong CER gains in the first quarter.

Huge Potential in Molecular Diagnostics: QIAGEN has recorded a robust demand for sample preparation instrument in the past few quarters. In the first quarter of 2022, QIAGEN’s QuantiFERON-TB sales improved 41% at CER. Robust instrument sales in the quarter under review were supported by strong quarterly placements of the QIAstat-Dx system for syndromic testing, the NeuMoDx system for integrated clinical PCR testing and the QIAcuity digital PCR platforms.

 

Zacks Investment ResearchImage Source: Zacks Investment Research

 

In the PCR Nucleic acid amplification product group, sales growth of 1% at CER was led by the QIAcuity digital PCR system and double-digit CER growth across the non-COVID product group.

Bullish Guidance:  The company’s full-year net sales are expected to be $2.12 billion at CER (up from the previously mentioned $2.07 billion), whereas it reported $2.25 billion in 2021. Adjusted EPS for 2022 is expected to be $2.14 at CER (up from the prior stated $2.05), whereas it reported $2.65 in 2021. 

Downsides

Competitive Headwinds: Considering QIAGEN’s huge gamut of services, the company is susceptible to competitive headwinds. It is facing increasing competition from firms that provide competitive 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.

Foreign Exchange Uncertainties: Recording more than 50% of its revenues from the international market, QIAGEN is highly exposed to the risk of foreign currency movements. The situation may worsen with the strengthening of the domestic currency against high-focus nations.

Estimate Trend

QIAGEN has been witnessing a positive estimate revision trend for the second quarter. Over the past 90 days, the Zacks Consensus Estimate for its earnings has moved 2.3% north to $0.45.

The Zacks Consensus Estimate for second-quarter 2022 revenues is pegged at $498.2 million, suggesting a 12.2% fall from the year-ago reported number.

Key Picks

A few better-ranked stocks in the broader medical space are UnitedHealth Group Incorporated (UNH - Free Report) , Medpace Holdings, Inc. (MEDP - Free Report) and Alkermes plc (ALKS - Free Report) .

UnitedHealth, with a Zacks Rank #2 (Buy), reported first-quarter 2022 earnings per share (EPS) of $5.49, which beat the Zacks Consensus Estimate by 1.7%. Revenues of $80.1 billion outpaced the consensus mark by 14.2%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

UnitedHealth has an estimated long-term growth rate of 14.8%. UNH’s earnings surpassed estimates in the trailing four quarters, the average surprise being 3.7%.

Medpace reported first-quarter 2022 adjusted EPS of $1.69, which surpassed the Zacks Consensus Estimate by 34.1%. Revenues of $330.9 million outpaced the Zacks Consensus Estimate by 1.1%. It currently has a Zacks Rank #2.

Medpace has a historical growth rate of 27.3%. MEDP’s earnings surpassed estimates in the trailing four quarters, the average surprise being 17.1%.

Alkermes reported first-quarter 2022 adjusted EPS of 12 cents, which surpassed the Zacks Consensus Estimate of a penny. Revenues of $278.6 million outpaced the Zacks Consensus Estimate by 6.2%. It currently sports a Zacks Rank #1.

Alkermes has an estimated long-term growth rate of 25.1%. ALKS’ earnings surpassed estimates in the trailing four quarters, the average surprise being 350.5%.