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Bio-Rad (BIO - Free Report) continues to get affected by unfavorable macroeconomic conditions. Also, competitive headwinds and currency fluctuations pose a threat to the stock's value. The stock carries a Zacks Rank #4 (Sell) currently.
Bio-Rad’s first-quarter results were unfavorably impacted by increased sanctions in Russia, increased early-stage biotech companies’ pressure and persistent supply-chain challenges, including those associated with the transfer of manufacturing lines and ramp-up in Asia. Further, a significant decline in COVID-related sales resulted in a year-over-year decrease in the top line.
Asia posted a modest year-over-year decline in core revenues due to tough comparisons for the process chromatography franchise related to a very large customer order in the year-ago period. The company’s Life Science Group registered a 6.8% year-over-year decrease and a 3.6% decline on a currency-neutral basis.
The year-over-year currency-neutral core revenue growth in the underlying Life Science group was lower than Bio-Rad’s outlook. This was due to increased sanctions on sales of certain products to Russia and growing revenue headwind from biopharma companies due to the funding environment for early-stage biotech companies. The process chromatography business witnessed a slowdown in the quarter due to tough comparisons and some softness in the bioprocessing market.
During the first quarter, Bio-Rad’s gross margin contracted 397 basis points as a result of lower pandemic-related sales, an unfavorable product mix and a higher cost of raw materials. Operating expenses were up 17.3% year over year, resulting in a 57.7% decrease in the operating profit compared to the first quarter of 2022.
On a positive note, Bio-Rad exited the first quarter of 2023 with an earnings beat, while revenues almost matched estimates. Despite the year-over-year decline in COVID-19 sales, the company delivered more than 6% currency-neutral core sales growth in the first quarter. Clinical Diagnostics revenues increased 3.1% year over year, on a currency-neutral basis, driven by the strong demand for diagnostic instruments.
The demand for the newly launched QX600 ddPCR platform continued a strong trend line from the fourth quarter of 2022. From its growing pipeline, Bio-Rad is set to introduce the ddPCR microsatellite instability kit toward the end of the quarter. This expands the company’s oncology assay menu for Droplet Digital PCR.
Bio-Rad expects the demand momentum to continue across clinical systems and the Life Science business for the rest of the year. On the supply-chain front, the company anticipates clearing the extended Life Science backlog by the end of the second quarter and the clinical backlog by the end of the year.
Bio-Rad has been deriving more than 60% of its net sales from international markets. The company experienced currency-neutral year-over-year core revenue growth in the Americas and Europe, while Asia posted a modest decline. This was due to tough comparison for the process chromatography franchise related to a very large customer order in the year-ago period.
On a geographic basis, the Clinical Diagnostics group’s year-over-year currency-neutral core revenues posted double-digit growth in Asia. Meanwhile, currency-neutral core revenues were largely flat in the Americas and Europe compared to the year-ago period.
In the past year, Bio-Rad has outperformed its industry. The stock has declined 30.7% compared with the industry’s 34% fall.
Key Picks
Bio-Rad carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are Addus Homecare Corporation (ADUS - Free Report) , Merit Medical Systems, Inc. (MMSI - Free Report) and Hologic, Inc. (HOLX - Free Report) .
The Zacks Consensus Estimate for Addus Homecare’s 2023 earnings indicates 10.9% year-over-year growth. The Zacks Consensus Estimate for ADUS’s 2023 earnings has moved 0.5% north in the past 30 days.
Merit Medical reported first-quarter 2023 adjusted EPS of 64 cents, beating the Zacks Consensus Estimate by 16.4%. Revenues of $297.6 million surpassed the Zacks Consensus Estimate by 5.9%. It currently carries a Zacks Rank #2.
Merit Medical has a long-term estimated growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 20.2%.
Hologic, carrying a Zacks Rank #2 at present, has an estimated growth rate of 5.1% for fiscal 2024. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average being 27.3%.
Hologic has gained 5% against the industry’s 2.2% decline in the past year.
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Bio-Rad (BIO) Faces Macroeconomic Headwinds, Rising Expenses
Bio-Rad (BIO - Free Report) continues to get affected by unfavorable macroeconomic conditions. Also, competitive headwinds and currency fluctuations pose a threat to the stock's value. The stock carries a Zacks Rank #4 (Sell) currently.
Bio-Rad’s first-quarter results were unfavorably impacted by increased sanctions in Russia, increased early-stage biotech companies’ pressure and persistent supply-chain challenges, including those associated with the transfer of manufacturing lines and ramp-up in Asia. Further, a significant decline in COVID-related sales resulted in a year-over-year decrease in the top line.
Asia posted a modest year-over-year decline in core revenues due to tough comparisons for the process chromatography franchise related to a very large customer order in the year-ago period. The company’s Life Science Group registered a 6.8% year-over-year decrease and a 3.6% decline on a currency-neutral basis.
The year-over-year currency-neutral core revenue growth in the underlying Life Science group was lower than Bio-Rad’s outlook. This was due to increased sanctions on sales of certain products to Russia and growing revenue headwind from biopharma companies due to the funding environment for early-stage biotech companies. The process chromatography business witnessed a slowdown in the quarter due to tough comparisons and some softness in the bioprocessing market.
During the first quarter, Bio-Rad’s gross margin contracted 397 basis points as a result of lower pandemic-related sales, an unfavorable product mix and a higher cost of raw materials. Operating expenses were up 17.3% year over year, resulting in a 57.7% decrease in the operating profit compared to the first quarter of 2022.
Bio-Rad Laboratories, Inc. Price
Bio-Rad Laboratories, Inc. price | Bio-Rad Laboratories, Inc. Quote
On a positive note, Bio-Rad exited the first quarter of 2023 with an earnings beat, while revenues almost matched estimates. Despite the year-over-year decline in COVID-19 sales, the company delivered more than 6% currency-neutral core sales growth in the first quarter. Clinical Diagnostics revenues increased 3.1% year over year, on a currency-neutral basis, driven by the strong demand for diagnostic instruments.
The demand for the newly launched QX600 ddPCR platform continued a strong trend line from the fourth quarter of 2022. From its growing pipeline, Bio-Rad is set to introduce the ddPCR microsatellite instability kit toward the end of the quarter. This expands the company’s oncology assay menu for Droplet Digital PCR.
Bio-Rad expects the demand momentum to continue across clinical systems and the Life Science business for the rest of the year. On the supply-chain front, the company anticipates clearing the extended Life Science backlog by the end of the second quarter and the clinical backlog by the end of the year.
Bio-Rad has been deriving more than 60% of its net sales from international markets. The company experienced currency-neutral year-over-year core revenue growth in the Americas and Europe, while Asia posted a modest decline. This was due to tough comparison for the process chromatography franchise related to a very large customer order in the year-ago period.
On a geographic basis, the Clinical Diagnostics group’s year-over-year currency-neutral core revenues posted double-digit growth in Asia. Meanwhile, currency-neutral core revenues were largely flat in the Americas and Europe compared to the year-ago period.
In the past year, Bio-Rad has outperformed its industry. The stock has declined 30.7% compared with the industry’s 34% fall.
Key Picks
Bio-Rad carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are Addus Homecare Corporation (ADUS - Free Report) , Merit Medical Systems, Inc. (MMSI - Free Report) and Hologic, Inc. (HOLX - Free Report) .
The Zacks Consensus Estimate for Addus Homecare’s 2023 earnings indicates 10.9% year-over-year growth. The Zacks Consensus Estimate for ADUS’s 2023 earnings has moved 0.5% north in the past 30 days.
Addus Homecare has a long-term estimated growth rate of 11.8%. The stock carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Merit Medical reported first-quarter 2023 adjusted EPS of 64 cents, beating the Zacks Consensus Estimate by 16.4%. Revenues of $297.6 million surpassed the Zacks Consensus Estimate by 5.9%. It currently carries a Zacks Rank #2.
Merit Medical has a long-term estimated growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 20.2%.
Hologic, carrying a Zacks Rank #2 at present, has an estimated growth rate of 5.1% for fiscal 2024. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average being 27.3%.
Hologic has gained 5% against the industry’s 2.2% decline in the past year.