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Here's Why You Should Invest in IDEXX (IDXX) Stock for Now
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IDEXX Laboratories, Inc. (IDXX - Free Report) has been gaining from strong international growth. The ongoing strength in the company’s Companion Animal Group (CAG) business buoys optimism. However, foreign exchange headwinds and escalating expenses do not bode well.
In the past year, shares of this Zacks Rank #2 (Buy) company have lost 29.7% compared with the industry’s 22.6% fall. The S&P 500 fell 16.3% during the same period.
The renowned medical device company has a market capitalization of $35.61 billion. Over the past five years, the company registered earnings growth of 26.3%, ahead of the industry’s 9.9% rise. The long-term expected growth rate is estimated at 17.3%, compared with the industry’s growth expectation of 16.6%.
Let’s delve deeper.
Factors at Play
Q3 Upsides: 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 both 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.
Strong Global Performance: IDEXX continues to demonstrate solid growth globally. International revenues in primarily aided by a gain in CAG and Water businesses.
CAG premium instrument placements increased 10% in the third quarter, reflecting a 14% growth internationally, as clinics showed continued confidence in investing toward support of increasing demand for diagnostics globally.
CAG Continues to Perform Well: IDEXX derives the lion’s share of its revenues from the CAG segment. The company registered stellar third-quarter revenue growth within CAG.
Image Source: Zacks Investment Research
CAG Diagnostic recurring revenues in the reported quarter grew 9% organically. According to the company, key execution metrics were excellent in the second quarter, reflecting 10% gains in premium instrument placements. Overall, organic revenue gains are also supported by 15% organic growth in veterinary software and diagnostic imaging revenues.
Downsides
Mounting Operating Expenses: During the third quarter, IDEXX’s sales and marketing expenses rose 4.5%, while research and development expenses increased 18.8%. These escalating expenses are building significant pressure on the company’s bottom line.
Forex Woes: The majority of IDEXX’s consolidated revenues are derived from the sale of products in international markets. This makes the company vulnerable to unfavorable fluctuations in foreign currency.
Estimate Trends
IDEXX has been witnessing a downward estimate revision trend for 2022. For the past 60 days, the Zacks Consensus Estimate for IDEXX’s 2022 earnings has moved 1.4% down to $9.01.
The Zacks Consensus Estimate for 2022 revenues is pegged at $3.35 billion, suggesting 4.3% growth from the year-ago quarter’s reported number.
Other Key Picks
Some other top-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.
Orthofix Medical, currently carrying a Zacks Rank #1 (Strong Buy), 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%. MMSI’s earnings surpassed estimates in the trailing three quarters and missed in one, the average being 129.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
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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Here's Why You Should Invest in IDEXX (IDXX) Stock for Now
IDEXX Laboratories, Inc. (IDXX - Free Report) has been gaining from strong international growth. The ongoing strength in the company’s Companion Animal Group (CAG) business buoys optimism. However, foreign exchange headwinds and escalating expenses do not bode well.
In the past year, shares of this Zacks Rank #2 (Buy) company have lost 29.7% compared with the industry’s 22.6% fall. The S&P 500 fell 16.3% during the same period.
The renowned medical device company has a market capitalization of $35.61 billion. Over the past five years, the company registered earnings growth of 26.3%, ahead of the industry’s 9.9% rise. The long-term expected growth rate is estimated at 17.3%, compared with the industry’s growth expectation of 16.6%.
Let’s delve deeper.
Factors at Play
Q3 Upsides: 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 both 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.
Strong Global Performance: IDEXX continues to demonstrate solid growth globally. International revenues in primarily aided by a gain in CAG and Water businesses.
CAG premium instrument placements increased 10% in the third quarter, reflecting a 14% growth internationally, as clinics showed continued confidence in investing toward support of increasing demand for diagnostics globally.
CAG Continues to Perform Well: IDEXX derives the lion’s share of its revenues from the CAG segment. The company registered stellar third-quarter revenue growth within CAG.
CAG Diagnostic recurring revenues in the reported quarter grew 9% organically. According to the company, key execution metrics were excellent in the second quarter, reflecting 10% gains in premium instrument placements. Overall, organic revenue gains are also supported by 15% organic growth in veterinary software and diagnostic imaging revenues.
Downsides
Mounting Operating Expenses: During the third quarter, IDEXX’s sales and marketing expenses rose 4.5%, while research and development expenses increased 18.8%. These escalating expenses are building significant pressure on the company’s bottom line.
Forex Woes: The majority of IDEXX’s consolidated revenues are derived from the sale of products in international markets. This makes the company vulnerable to unfavorable fluctuations in foreign currency.
Estimate Trends
IDEXX has been witnessing a downward estimate revision trend for 2022. For the past 60 days, the Zacks Consensus Estimate for IDEXX’s 2022 earnings has moved 1.4% down to $9.01.
The Zacks Consensus Estimate for 2022 revenues is pegged at $3.35 billion, suggesting 4.3% growth from the year-ago quarter’s reported number.
Other Key Picks
Some other top-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.
Orthofix Medical, currently carrying a Zacks Rank #1 (Strong Buy), 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%. MMSI’s earnings surpassed estimates in the trailing three quarters and missed in one, the average being 129.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
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%.