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Here's Why You Should Invest in IDEXX (IDXX) Stock Right Now
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IDEXX Laboratories, Inc. (IDXX - Free Report) is gaining investors’ confidence, backed by the performance of the company’s CAG (Companion Animal Group) arm. In the second quarter, key execution metrics remained robust globally, reflecting premium instrument placements, continued solid new business gains and sustained high growth in recurring veterinary software revenues. However, a weak solvent position and the negative impacts of foreign currency are worrisome.
In the past year, this Zacks Rank #3 (Hold) stock has increased 29.8% against the 5.1% decline of the industry and a 3.2% rise of the S&P 500 composite.
The renowned medical device company has a market capitalization of $41.47 billion. IDEXX has an estimated long-term earnings growth rate of 17.6% compared with the industry’s 16.2%. IDXX’s earnings surpassed estimates in all the trailing four quarters, delivering an average surprise of 7.30%.
Let’s delve deeper.
Upsides
Solid Execution of the Growth Strategy Drives Q2 Performance: We are upbeat about IDEXX surpassing earnings and revenue estimates in the second quarter of 2023. Within the CAG business, continued high levels of organic growth in recurring software and digital imaging revenues as well as the ongoing momentum in cloud-based software placements are encouraging.
The company’s commercial teams drove record second-quarter global premium instrument placements. The updated guidance for the full year buoys optimism. Further, the expansion of both margins in the quarter appears promising.
Image Source: Zacks Investment Research
CAG Continues to Perform Well: In the last reported second quarter, IDEXX's CAG Diagnostics recurring revenues reflected the solid demand for veterinary services and the benefits of IDEXX execution drivers. Revenue growth remained solidly above sector growth levels.
These results reflected the benefits of execution drivers, including higher net price realization. Within the United States, volume growth was supported by new business gains, high customer retention levels and continued increases in diagnostic frequency and utilization at the practice level.
Internationally, performance was also supported by strong IDEXX execution, reflected in sustained new business gains and record second-quarter premium instrument placements.
Strong Global Performance: IDEXX’s Water business continues to gain in the United States, Europe and Latin America. The segment’s revenues were reflective of the benefits of net price improvement. The recent Tecta-PDS acquisition expanded IDXX’s capabilities in water safety testing, adding approximately 2% to the Water’s reported growth in the second quarter.
Across testing modalities, IDEXX VetLab Consumables posted strong growth in the second quarter in the United States and international regions. The company had another strong quarter in terms of Catalyst, Premium Hematology and SediVue placements. IDXX’s newest hematology analyzer, ProCyte One, held its momentum globally, reflecting a global installed base of nearly 10,800 instruments.
The global expansion of rapid assay organic revenues was driven by solid volume gains and the benefits of higher net price realization in the United States. Global organic lab revenues registered mid-single-digit growth in international regions.
Downsides
Foreign Exchange Headwinds: The majority of IDXX’s consolidated revenues are derived from the sale of products in international markets. Thus, the strengthening of the rate of exchange for the U.S. dollar relative to other currencies had a negative impact on the company’s revenues derived in currencies other than the U.S. dollar and profits from products manufactured in the United States and sold internationally.
Weak Solvency & Capital Structure: At the second quarter-end, IDEXX had total debt (including the current portion) of $771.8 million, much higher than corresponding cash and cash equivalents of $132.8 million. IDEXX’s total debt-to-capital of 41.4% stands higher than the industry’s debt-to-capital of 33.1%.
Estimate Trend
IDEXX has been witnessing a positive estimate revision trend for 2023. The Zacks Consensus Estimate for 2023 earnings per share (EPS) has moved up from $9.57 to $9.65 in the past 60 days.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $3.66 billion. This suggests an 8.6% rise from the year-ago reported number.
Haemonetics has an earnings yield of 4.10% against the industry’s -3.18%. Haemonetics’ earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 19.39%. Its shares have risen 20.3% against the industry’s 7.3% decline in the past year.
SiBone, carrying a Zacks Rank #2 at present, has a long-term estimated earnings growth rate of 22.9% compared with the industry’s 16.2%. Shares of the company have rallied 15.1% against the industry’s 5.1% decline over the past year.
SIBN’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 20.37%.
Align Technology, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 17.5% compared with the industry’s 12.2%. Shares of ALGN have risen 24% compared with the industry’s 10.5% rise over the past year.
ALGN’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one. In the last reported quarter, it posted an earnings surprise of 9.9%.
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Here's Why You Should Invest in IDEXX (IDXX) Stock Right Now
IDEXX Laboratories, Inc. (IDXX - Free Report) is gaining investors’ confidence, backed by the performance of the company’s CAG (Companion Animal Group) arm. In the second quarter, key execution metrics remained robust globally, reflecting premium instrument placements, continued solid new business gains and sustained high growth in recurring veterinary software revenues. However, a weak solvent position and the negative impacts of foreign currency are worrisome.
In the past year, this Zacks Rank #3 (Hold) stock has increased 29.8% against the 5.1% decline of the industry and a 3.2% rise of the S&P 500 composite.
The renowned medical device company has a market capitalization of $41.47 billion. IDEXX has an estimated long-term earnings growth rate of 17.6% compared with the industry’s 16.2%. IDXX’s earnings surpassed estimates in all the trailing four quarters, delivering an average surprise of 7.30%.
Let’s delve deeper.
Upsides
Solid Execution of the Growth Strategy Drives Q2 Performance: We are upbeat about IDEXX surpassing earnings and revenue estimates in the second quarter of 2023. Within the CAG business, continued high levels of organic growth in recurring software and digital imaging revenues as well as the ongoing momentum in cloud-based software placements are encouraging.
The company’s commercial teams drove record second-quarter global premium instrument placements. The updated guidance for the full year buoys optimism. Further, the expansion of both margins in the quarter appears promising.
Image Source: Zacks Investment Research
CAG Continues to Perform Well: In the last reported second quarter, IDEXX's CAG Diagnostics recurring revenues reflected the solid demand for veterinary services and the benefits of IDEXX execution drivers. Revenue growth remained solidly above sector growth levels.
These results reflected the benefits of execution drivers, including higher net price realization. Within the United States, volume growth was supported by new business gains, high customer retention levels and continued increases in diagnostic frequency and utilization at the practice level.
Internationally, performance was also supported by strong IDEXX execution, reflected in sustained new business gains and record second-quarter premium instrument placements.
Strong Global Performance: IDEXX’s Water business continues to gain in the United States, Europe and Latin America. The segment’s revenues were reflective of the benefits of net price improvement. The recent Tecta-PDS acquisition expanded IDXX’s capabilities in water safety testing, adding approximately 2% to the Water’s reported growth in the second quarter.
Across testing modalities, IDEXX VetLab Consumables posted strong growth in the second quarter in the United States and international regions. The company had another strong quarter in terms of Catalyst, Premium Hematology and SediVue placements. IDXX’s newest hematology analyzer, ProCyte One, held its momentum globally, reflecting a global installed base of nearly 10,800 instruments.
The global expansion of rapid assay organic revenues was driven by solid volume gains and the benefits of higher net price realization in the United States. Global organic lab revenues registered mid-single-digit growth in international regions.
Downsides
Foreign Exchange Headwinds: The majority of IDXX’s consolidated revenues are derived from the sale of products in international markets. Thus, the strengthening of the rate of exchange for the U.S. dollar relative to other currencies had a negative impact on the company’s revenues derived in currencies other than the U.S. dollar and profits from products manufactured in the United States and sold internationally.
Weak Solvency & Capital Structure: At the second quarter-end, IDEXX had total debt (including the current portion) of $771.8 million, much higher than corresponding cash and cash equivalents of $132.8 million. IDEXX’s total debt-to-capital of 41.4% stands higher than the industry’s debt-to-capital of 33.1%.
Estimate Trend
IDEXX has been witnessing a positive estimate revision trend for 2023. The Zacks Consensus Estimate for 2023 earnings per share (EPS) has moved up from $9.57 to $9.65 in the past 60 days.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $3.66 billion. This suggests an 8.6% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Haemonetics (HAE - Free Report) , SiBone (SIBN - Free Report) and Align Technology (ALGN - Free Report) .
Haemonetics has an earnings yield of 4.10% against the industry’s -3.18%. Haemonetics’ earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 19.39%. Its shares have risen 20.3% against the industry’s 7.3% decline in the past year.
HAE sports a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
SiBone, carrying a Zacks Rank #2 at present, has a long-term estimated earnings growth rate of 22.9% compared with the industry’s 16.2%. Shares of the company have rallied 15.1% against the industry’s 5.1% decline over the past year.
SIBN’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 20.37%.
Align Technology, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 17.5% compared with the industry’s 12.2%. Shares of ALGN have risen 24% compared with the industry’s 10.5% rise over the past year.
ALGN’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one. In the last reported quarter, it posted an earnings surprise of 9.9%.