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Here's Why You Should Retain Bio-Rad (BIO) Stock for Now
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Bio-Rad Laboratories, Inc. (BIO - Free Report) is well-poised for growth in the coming quarters, backed by robust demand in Life Science and Clinical Diagnostics arms. The company’s earnings for the third quarter of 2022 beat the Zacks Consensus Estimate. However, declining sales and tough competition are concerning.
In the past year, shares of this Zacks Rank #3 (Hold) company have lost 36.5% against a 41.2% fall of the industry and a 19.2% decline of the S&P 500 composite.
The renowned manufacturer and global supplier of clinical diagnostics and life science research products has a market capitalization of $12.84 billion.
In the past five years, the company registered earnings growth of 31.2%, way ahead of the industry’s 10.2% rise and the S&P 500’s 13.4% increase. The company’s earnings have surpassed estimates in the trailing four quarters, the average surprise being 31.52%.
Let’s delve deeper.
Key Drivers
Q3 Upsides: Bio-Rad exited the third quarter of 2022 with better-than-expected earnings. The company experienced currency-neutral year-over-year core revenue growth in Europe and Asia. Strong demand was witnessed for Life Science and Clinical Diagnostic products. The company’s organization is broadly back to normal operations. Bio-Rad also had modestly higher-than-expected demand for COVID-related products, particularly in the Asia Pacific.
Segmental Growth: Despite supply-chain constraints, underlying Life Science year-over-year currency-neutral core revenue growth was 9.4%. 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 supply-chain challenges. Core Clinical Diagnostics’ year-over-year revenue growth, excluding COVID-related sales, increased 3.7% on a currency-neutral basis. Quality control, blood typing and infectious disease products drove the Diagnostics group's currency-neutral year-over-year sales.
Image Source: Zacks Investment Research
Focus on International Markets: In recent times, Bio-Rad has been deriving more than 60% of its net sales from international markets. Europe happens to be the largest international market for the company. In the third quarter, the company experienced currency-neutral year-over-year core revenue growth in Asia and Europe. Life Science experienced currency-neutral year-over-year core revenue growth across both regions. The diagnostics group’s year-over-year currency-neutral core revenues grew in the Americas and Asia.
Downsides
Exposure to Foreign Currency: Bio-Rad derives more than 50% of its revenues from the international market, which exposes it to the effects of fluctuations in foreign currency. In the past several years, the company’s earnings were significantly affected by foreign exchange.
Tough Competitive Pressure: Bio-Rad operates in a highly competitive environment dominated by firms varying from large multinational corporations to start-ups. Also, the competitive and regulatory conditions in the markets, wherein the company operates, limit its ability to switch to strategies like price increases and other drivers of cost increases.
Estimate Trends
The Zacks Consensus Estimate for Bio-Rad’s 2022 earnings is pegged at $14.38, suggesting an 8.2% fall from the year-ago reported number.
The Zacks Consensus Estimate for the company’s 2022 revenues is pinned at $2.83 billion, indicating a 3.3% fall from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Boston Scientific Corporation (BSX - Free Report) and Merit Medical Systems, Inc. (MMSI - Free Report) .
AMN Healthcare, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average beat being 10.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AMN Healthcare has lost 10.6% compared with the industry’s 30.3% decline in the past year.
Boston Scientific, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.3%. BSX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average beat being 1.9%.
Boston Scientific has gained 6.8% against the industry’s 42.6% decline over the past year.
Merit Medical, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average beat being 25.4%.
Merit Medical has gained 13.7% against the industry’s 8.7% decline over the past year.
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Here's Why You Should Retain Bio-Rad (BIO) Stock for Now
Bio-Rad Laboratories, Inc. (BIO - Free Report) is well-poised for growth in the coming quarters, backed by robust demand in Life Science and Clinical Diagnostics arms. The company’s earnings for the third quarter of 2022 beat the Zacks Consensus Estimate. However, declining sales and tough competition are concerning.
In the past year, shares of this Zacks Rank #3 (Hold) company have lost 36.5% against a 41.2% fall of the industry and a 19.2% decline of the S&P 500 composite.
The renowned manufacturer and global supplier of clinical diagnostics and life science research products has a market capitalization of $12.84 billion.
In the past five years, the company registered earnings growth of 31.2%, way ahead of the industry’s 10.2% rise and the S&P 500’s 13.4% increase. The company’s earnings have surpassed estimates in the trailing four quarters, the average surprise being 31.52%.
Let’s delve deeper.
Key Drivers
Q3 Upsides: Bio-Rad exited the third quarter of 2022 with better-than-expected earnings. The company experienced currency-neutral year-over-year core revenue growth in Europe and Asia. Strong demand was witnessed for Life Science and Clinical Diagnostic products. The company’s organization is broadly back to normal operations. Bio-Rad also had modestly higher-than-expected demand for COVID-related products, particularly in the Asia Pacific.
Segmental Growth: Despite supply-chain constraints, underlying Life Science year-over-year currency-neutral core revenue growth was 9.4%. 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 supply-chain challenges.
Core Clinical Diagnostics’ year-over-year revenue growth, excluding COVID-related sales, increased 3.7% on a currency-neutral basis. Quality control, blood typing and infectious disease products drove the Diagnostics group's currency-neutral year-over-year sales.
Focus on International Markets: In recent times, Bio-Rad has been deriving more than 60% of its net sales from international markets. Europe happens to be the largest international market for the company.
In the third quarter, the company experienced currency-neutral year-over-year core revenue growth in Asia and Europe. Life Science experienced currency-neutral year-over-year core revenue growth across both regions. The diagnostics group’s year-over-year currency-neutral core revenues grew in the Americas and Asia.
Downsides
Exposure to Foreign Currency: Bio-Rad derives more than 50% of its revenues from the international market, which exposes it to the effects of fluctuations in foreign currency. In the past several years, the company’s earnings were significantly affected by foreign exchange.
Tough Competitive Pressure: Bio-Rad operates in a highly competitive environment dominated by firms varying from large multinational corporations to start-ups. Also, the competitive and regulatory conditions in the markets, wherein the company operates, limit its ability to switch to strategies like price increases and other drivers of cost increases.
Estimate Trends
The Zacks Consensus Estimate for Bio-Rad’s 2022 earnings is pegged at $14.38, suggesting an 8.2% fall from the year-ago reported number.
The Zacks Consensus Estimate for the company’s 2022 revenues is pinned at $2.83 billion, indicating a 3.3% fall from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Boston Scientific Corporation (BSX - Free Report) and Merit Medical Systems, Inc. (MMSI - Free Report) .
AMN Healthcare, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average beat being 10.9%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AMN Healthcare has lost 10.6% compared with the industry’s 30.3% decline in the past year.
Boston Scientific, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.3%. BSX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average beat being 1.9%.
Boston Scientific has gained 6.8% against the industry’s 42.6% decline over the past year.
Merit Medical, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average beat being 25.4%.
Merit Medical has gained 13.7% against the industry’s 8.7% decline over the past year.