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Bio-Rad’s (BIO - Free Report) Clinical Diagnostics arm continues to gain momentum. The company’s focus on geographic expansion is also encouraging. However, unfavorable macroeconomic conditions continue to weigh heavily on Bio-Rad’s stock. The stock carries a Zacks Rank #3 (Hold).
Over the past year, Bio-Rad has outperformed its industry. The stock has declined 44.7% compared with the industry’s 45.6% decline.
Bio-Rad exited the third quarter of 2022 with better-than-expected earnings. Bio-Rad experienced currency-neutral year-over-year core revenue growth in Europe and Asia. Strong demand was witnessed for both Life Science and Clinical Diagnostic products. The company’s organization is broadly back to normal operations.
Despite supply chain constraints, year-over-year currency-neutral core revenue growth of Life Science was 9.4%. The year-over-year growth was primarily driven by Western loading, qPCR, process media and antibody products. Bio-Rad continues to see a strong order backlog for ddPCR instruments as it continues to work through the supply chain challenges. During the third quarter, the company launched the QX600 ddPCR system and the initial market reception for the QX600 has been encouraging. Process media saw strong year-over-year growth and the company expects strong double-digit growth for the franchise for full-year 2022.
Further, core Clinical Diagnostics’ year-over-year revenue growth, excluding COVID-related sales, was 3.7% on a currency-neutral basis. The quality control, blood typing and infectious disease products drove the Diagnostics group's currency-neutral year-over-year sales.
Bio-Rad also witnessed modestly higher-than-expected demand for COVID-related products, particularly in the Asia Pacific. The company is currently observing higher production volumes and anticipates reductions of order backlog through the remainder of 2022.
Overall, the company’s expectation of registering currency-neutral revenue growth at the high end of the 1-2% range is encouraging.
On the flip side, during the third quarter, Bio-Rad’s Life Sciences arm registered a 14.9% year-over-year decline. The receipt of the one-time $32 million settlement for bank royalties in the year-ago period made the year-over-year comparison tough. Excluding last year's 10x settlement, Life Science Group sales declined 6.9% on a reported basis and a 2.3% decline on a currency-neutral basis due to lower COVID-related sales.
Sales of the Clinical Diagnostics Group in the third quarter registered a 2.8% decline on a reported basis. Supply chain constraints had an impact on instrument placements.
In the quarter under review, Bio-Rad’s gross profit fell 14.5%. Gross margin contracted 365 basis points (bps) to 54.9%. The operating margin in the third quarter contracted 736 bps to 13.6%.
A tough competitive landscape and persistent macroeconomic issues are the other downsides.
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, carrying 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 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%. 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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Bio-Rad (BIO) Core Diagnostic Sales Grow Amid Supply Challenges
Bio-Rad’s (BIO - Free Report) Clinical Diagnostics arm continues to gain momentum. The company’s focus on geographic expansion is also encouraging. However, unfavorable macroeconomic conditions continue to weigh heavily on Bio-Rad’s stock. The stock carries a Zacks Rank #3 (Hold).
Over the past year, Bio-Rad has outperformed its industry. The stock has declined 44.7% compared with the industry’s 45.6% decline.
Bio-Rad exited the third quarter of 2022 with better-than-expected earnings. Bio-Rad experienced currency-neutral year-over-year core revenue growth in Europe and Asia. Strong demand was witnessed for both Life Science and Clinical Diagnostic products. The company’s organization is broadly back to normal operations.
Despite supply chain constraints, year-over-year currency-neutral core revenue growth of Life Science was 9.4%. The year-over-year growth was primarily driven by Western loading, qPCR, process media and antibody products. Bio-Rad continues to see a strong order backlog for ddPCR instruments as it continues to work through the supply chain challenges. During the third quarter, the company launched the QX600 ddPCR system and the initial market reception for the QX600 has been encouraging. Process media saw strong year-over-year growth and the company expects strong double-digit growth for the franchise for full-year 2022.
BioRad Laboratories, Inc. Price
BioRad Laboratories, Inc. price | BioRad Laboratories, Inc. Quote
Further, core Clinical Diagnostics’ year-over-year revenue growth, excluding COVID-related sales, was 3.7% on a currency-neutral basis. The quality control, blood typing and infectious disease products drove the Diagnostics group's currency-neutral year-over-year sales.
Bio-Rad also witnessed modestly higher-than-expected demand for COVID-related products, particularly in the Asia Pacific. The company is currently observing higher production volumes and anticipates reductions of order backlog through the remainder of 2022.
Overall, the company’s expectation of registering currency-neutral revenue growth at the high end of the 1-2% range is encouraging.
On the flip side, during the third quarter, Bio-Rad’s Life Sciences arm registered a 14.9% year-over-year decline. The receipt of the one-time $32 million settlement for bank royalties in the year-ago period made the year-over-year comparison tough. Excluding last year's 10x settlement, Life Science Group sales declined 6.9% on a reported basis and a 2.3% decline on a currency-neutral basis due to lower COVID-related sales.
Sales of the Clinical Diagnostics Group in the third quarter registered a 2.8% decline on a reported basis. Supply chain constraints had an impact on instrument placements.
In the quarter under review, Bio-Rad’s gross profit fell 14.5%. Gross margin contracted 365 basis points (bps) to 54.9%. The operating margin in the third quarter contracted 736 bps to 13.6%.
A tough competitive landscape and persistent macroeconomic issues are the other downsides.
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, carrying 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 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%. 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%.