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IDEXX (IDXX) CAG Sales Growth Strong, Costs Continue to Rise
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IDEXX Laboratories, Inc.'s (IDXX - Free Report) robust worldwide commercial capabilities, along with a sturdy CAG arm, have turned into key growth drivers for the company. Yet, currency fluctuations along with high dependence on third-party distributors remain overhangs for the company. The stock currently carries a Zacks Rank #3 (Hold).
IDEXX exited the third quarter of 2022 on a decent note, with earnings and revenues beating estimates. The company registered year-over-year growth in revenues on a reported and organic basis. The top line was driven by strong CAG Diagnostics recurring revenue growth.
The upside was supported by record instrument placements, resulting in a year-over-year expansion of IDEXX's global premium instrument installed base, which is encouraging. The company continues to demonstrate solid growth globally.
IDEXX continues to demonstrate solid growth globally. International revenues are primarily aided by gains in CAG and Water businesses.
CAG premium instrument placements increased 10% in the third quarter, reflecting 14% growth internationally, as clinics showed continued confidence in investing toward supporting demand for diagnostics globally. The quality of instrument placements continued to be excellent, reflected in 30% growth in new and competitive Catalyst placements. ProCyte One momentum continues to rise, supported by the company’s global expansion efforts leading to a 26% year-on-year increase in premium hematology placements in the reported quarter.
Global rapid assay revenues increased 7% organically, supported by solid volume gains in the United States and benefits from net price increases. Reference Lab new business momentum and customer retention remain strong globally. IDEXX achieved continued solid net price gains in the quarter globally with an average 9% growth benefit to U.S. and worldwide CAG Diagnostic recurring revenues.
Water revenues increased 12% organically in the third quarter, reflecting solid volume growth across U.S. and international regions and benefits from net price gains.
On the flip side, during the third quarter, LPD revenues declined in the quarter on a reported basis. Further, inflationary pressure has been weighing on the bottom line. The reduced EPS guidance for 2022 and narrowed organic revenue growth range reflect the ongoing severe foreign exchange headwind.
Further, escalating operating costs resulting in a contraction in the operating margin is a concern. According to the company, $83.8 million of discrete R&D investment in the quarter and operating expense growth related to investments in commercial capabilities put pressure on the bottom line.
Over the past year, IDEXX has been underperforming its industry with respect to share price movement. The stock has lost 30.5% compared with the 24.5% decline of the industry.
Key Picks
A few better-ranked stocks in the broader medical space that investors can consider are ShockWave Medical, Inc. (SWAV - Free Report) , Orthofix Medical Inc. (OFIX - Free Report) and Merit Medical System (MMSI - Free Report) .
ShockWave Medical, sporting a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 33.1% for 2023. The company’s earnings surpassed estimates in all the trailing four quarters, the average beat being 180.1%.
Orthofix Medical, currently carrying a Zacks Rank #1, reported third-quarter 2022 adjusted EPS of 13 cents, which beat the Zacks Consensus Estimate by a stupendous 550%. Revenues of $114 million outpaced the consensus mark by 2.7%.
Orthofix Medical has an estimated next-year growth rate of 58.97%. OFIX’s earnings surpassed estimates in the trailing three quarters and missed in one, the average being 129.1%.
Merit Medical, currently carrying a Zacks Rank of 2, reported third-quarter 2022 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 20.8%. Revenues of $287.2 million outpaced the consensus mark by 5.2%.
Merit Medical has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average being 25.4%.
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IDEXX (IDXX) CAG Sales Growth Strong, Costs Continue to Rise
IDEXX Laboratories, Inc.'s (IDXX - Free Report) robust worldwide commercial capabilities, along with a sturdy CAG arm, have turned into key growth drivers for the company. Yet, currency fluctuations along with high dependence on third-party distributors remain overhangs for the company. The stock currently carries a Zacks Rank #3 (Hold).
IDEXX exited the third quarter of 2022 on a decent note, with earnings and revenues beating estimates. The company registered year-over-year growth in revenues on a reported and organic basis. The top line was driven by strong CAG Diagnostics recurring revenue growth.
The upside was supported by record instrument placements, resulting in a year-over-year expansion of IDEXX's global premium instrument installed base, which is encouraging. The company continues to demonstrate solid growth globally.
IDEXX continues to demonstrate solid growth globally. International revenues are primarily aided by gains in CAG and Water businesses.
IDEXX Laboratories, Inc. Price
IDEXX Laboratories, Inc. price | IDEXX Laboratories, Inc. Quote
CAG premium instrument placements increased 10% in the third quarter, reflecting 14% growth internationally, as clinics showed continued confidence in investing toward supporting demand for diagnostics globally. The quality of instrument placements continued to be excellent, reflected in 30% growth in new and competitive Catalyst placements. ProCyte One momentum continues to rise, supported by the company’s global expansion efforts leading to a 26% year-on-year increase in premium hematology placements in the reported quarter.
Global rapid assay revenues increased 7% organically, supported by solid volume gains in the United States and benefits from net price increases. Reference Lab new business momentum and customer retention remain strong globally. IDEXX achieved continued solid net price gains in the quarter globally with an average 9% growth benefit to U.S. and worldwide CAG Diagnostic recurring revenues.
Water revenues increased 12% organically in the third quarter, reflecting solid volume growth across U.S. and international regions and benefits from net price gains.
On the flip side, during the third quarter, LPD revenues declined in the quarter on a reported basis. Further, inflationary pressure has been weighing on the bottom line. The reduced EPS guidance for 2022 and narrowed organic revenue growth range reflect the ongoing severe foreign exchange headwind.
Further, escalating operating costs resulting in a contraction in the operating margin is a concern. According to the company, $83.8 million of discrete R&D investment in the quarter and operating expense growth related to investments in commercial capabilities put pressure on the bottom line.
Over the past year, IDEXX has been underperforming its industry with respect to share price movement. The stock has lost 30.5% compared with the 24.5% decline of the industry.
Key Picks
A few better-ranked stocks in the broader medical space that investors can consider are ShockWave Medical, Inc. (SWAV - Free Report) , Orthofix Medical Inc. (OFIX - Free Report) and Merit Medical System (MMSI - Free Report) .
ShockWave Medical, sporting a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 33.1% for 2023. The company’s earnings surpassed estimates in all the trailing four quarters, the average beat being 180.1%.
ShockWave Medical has outperformed its industry in the past year. SWAV has gained 35% against the industry’s 32.6% fall in the past year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Orthofix Medical, currently carrying a Zacks Rank #1, reported third-quarter 2022 adjusted EPS of 13 cents, which beat the Zacks Consensus Estimate by a stupendous 550%. Revenues of $114 million outpaced the consensus mark by 2.7%.
Orthofix Medical has an estimated next-year growth rate of 58.97%. OFIX’s earnings surpassed estimates in the trailing three quarters and missed in one, the average being 129.1%.
Merit Medical, currently carrying a Zacks Rank of 2, reported third-quarter 2022 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 20.8%. Revenues of $287.2 million outpaced the consensus mark by 5.2%.
Merit Medical has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average being 25.4%.