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Bio-Rad’s (BIO - Free Report) performance has been affected by softness in the biopharma space, uncertain global macroeconomic conditions and adverse currency impacts. The stock carries a Zacks Rank #5 (Strong Sell) currently.
Since the beginning of 2023, Bio-Rad has been witnessing softness in smaller biopharma companies, where historically, demand for life science products has been strong. This directly correlates with funding constraints the broader pharmaceutical industry had started to experience. Management stated that the softness in the biopharma space has resulted in the Life Science Segment’s decelerated growth.
In the third quarter of 2023, negative macro trends persisted. Bio-Rad experienced reduced demand from biopharma customers for its process chromatography resins and from both biopharma and smaller biotech customers for Life Science research projects – products. Bio-Rad experienced weaker demand from government accounts in China due to softening macroeconomic conditions.
On the third-quarter earnings call, management stated that the situation might have a potentially larger impact on the company’s BioPharma business than initially communicated. This takes into account a core revenue guidance cut of 200 basis points related to the third-quarter revenue shortfall due to weakness in the biopharma industry and softer demand in China.
Further, in recent times, Bio-Rad’s margin performance has been affected by elevated raw material costs, increased logistics costs and higher employee-related expenses. In the third quarter, the company’s gross margin was additionally impacted by an unfavorable product mix, with a higher-than-anticipated percentage of instrument sales versus reagents, as well as lower-than-projected revenues in the Life Science Group.
These macroeconomic factors, particularly the ongoing labor unrest, rising wage and raw material costs, along with the ongoing geopolitical unrest, are resulting in a significant escalation in the company’s operating expenses. Bio-Rad witnessed a 3.9% year-over-year decline in operating profit in the third quarter.
Over the past year, shares of Bio-Rad have declined 21.4% compared with the industry’s 0.9% drop.
On a positive note, following the acquisition of Dropworks in 2021, Bio-Rad is consistently developing its foothold in the rapidly growing digital PCR space to address additional opportunities in the PCR market. The pipeline of Bio-Rad’s QX600 Droplet Digital PCR platform is currently robust and growing. Backed by the tremendous customer response, the company continues to ramp up production capacity to accommodate ongoing demand.
The company’s diabetes franchise is seeing elevated growth and a substantial improvement in the immunohematology and quality control businesses. Bio-Rad recently launched the IH-500 next instrument, designed to enhance the functionality of the system along with increased security from potential cyberattacks. The platform update, which includes updated software, increases the competitiveness of the company’s transfusion medicine portfolio. With the ramp-up of production in Singapore following the manufacturing transition, management has better visibility on future Diagnostics output and, therefore, backlog reduction.
In the third quarter, Clinical Diagnostics sales were up 1% at CER, led by increased demand for diagnostic testing systems and quality control products. Overall, growth of the Clinical Diagnostics Group was driven by strong demand for diagnostic testing systems, primarily within diabetes and blood typing, and growth from the quality control portfolio.
Estimates for Insulet’s 2023 earnings per share have moved up from $1.90 to $1.91 in the past 30 days. Shares of the company have plunged 28.8% in the past year compared with the industry’s decline of 2.2%.
PODD’s earnings surpassed estimates in each ofthe trailing four quarters, the average surprise being 105.1%. In the last reported quarter, it delivered an average earnings surprise of 77.4%.
Haemonetics’ stock has risen 10.8% in the past year. Earnings estimates for Haemonetics have increased from $3.86 to $3.89 for 2023 and from $4.11 to $4.15 for 2024 in the past 30 days.
HAE’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 16.1%. In the last reported quarter, it posted an earnings surprise of 5.3%.
Estimates for DexCom’s 2023 earnings per share have increased from $1.43 to $1.44 in the past 30 days. Shares of the company have increased 7.4% in the past year compared with the industry’s rise of 2.2%.
DXCM’s earnings surpassed estimates in each ofthe trailing four quarters, the average surprise being 36.4%. In the last reported quarter, it delivered an average earnings surprise of 47.1%.
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Bio-Rad (BIO) Faces Soft Industry-wide Demand, Macro Woes
Bio-Rad’s (BIO - Free Report) performance has been affected by softness in the biopharma space, uncertain global macroeconomic conditions and adverse currency impacts. The stock carries a Zacks Rank #5 (Strong Sell) currently.
Since the beginning of 2023, Bio-Rad has been witnessing softness in smaller biopharma companies, where historically, demand for life science products has been strong. This directly correlates with funding constraints the broader pharmaceutical industry had started to experience. Management stated that the softness in the biopharma space has resulted in the Life Science Segment’s decelerated growth.
In the third quarter of 2023, negative macro trends persisted. Bio-Rad experienced reduced demand from biopharma customers for its process chromatography resins and from both biopharma and smaller biotech customers for Life Science research projects – products. Bio-Rad experienced weaker demand from government accounts in China due to softening macroeconomic conditions.
On the third-quarter earnings call, management stated that the situation might have a potentially larger impact on the company’s BioPharma business than initially communicated. This takes into account a core revenue guidance cut of 200 basis points related to the third-quarter revenue shortfall due to weakness in the biopharma industry and softer demand in China.
Bio-Rad Laboratories, Inc. Price
Bio-Rad Laboratories, Inc. price | Bio-Rad Laboratories, Inc. Quote
Further, in recent times, Bio-Rad’s margin performance has been affected by elevated raw material costs, increased logistics costs and higher employee-related expenses. In the third quarter, the company’s gross margin was additionally impacted by an unfavorable product mix, with a higher-than-anticipated percentage of instrument sales versus reagents, as well as lower-than-projected revenues in the Life Science Group.
These macroeconomic factors, particularly the ongoing labor unrest, rising wage and raw material costs, along with the ongoing geopolitical unrest, are resulting in a significant escalation in the company’s operating expenses. Bio-Rad witnessed a 3.9% year-over-year decline in operating profit in the third quarter.
Over the past year, shares of Bio-Rad have declined 21.4% compared with the industry’s 0.9% drop.
On a positive note, following the acquisition of Dropworks in 2021, Bio-Rad is consistently developing its foothold in the rapidly growing digital PCR space to address additional opportunities in the PCR market. The pipeline of Bio-Rad’s QX600 Droplet Digital PCR platform is currently robust and growing. Backed by the tremendous customer response, the company continues to ramp up production capacity to accommodate ongoing demand.
The company’s diabetes franchise is seeing elevated growth and a substantial improvement in the immunohematology and quality control businesses. Bio-Rad recently launched the IH-500 next instrument, designed to enhance the functionality of the system along with increased security from potential cyberattacks. The platform update, which includes updated software, increases the competitiveness of the company’s transfusion medicine portfolio. With the ramp-up of production in Singapore following the manufacturing transition, management has better visibility on future Diagnostics output and, therefore, backlog reduction.
In the third quarter, Clinical Diagnostics sales were up 1% at CER, led by increased demand for diagnostic testing systems and quality control products. Overall, growth of the Clinical Diagnostics Group was driven by strong demand for diagnostic testing systems, primarily within diabetes and blood typing, and growth from the quality control portfolio.
Key Picks
Some better-ranked stocks in the broader medical space are Insulet (PODD - Free Report) , Haemonetics (HAE - Free Report) and DexCom (DXCM - Free Report) . Insulet sports a Zacks Rank #1 (Strong Buy), while Haemonetics and DexCom presently carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Estimates for Insulet’s 2023 earnings per share have moved up from $1.90 to $1.91 in the past 30 days. Shares of the company have plunged 28.8% in the past year compared with the industry’s decline of 2.2%.
PODD’s earnings surpassed estimates in each ofthe trailing four quarters, the average surprise being 105.1%. In the last reported quarter, it delivered an average earnings surprise of 77.4%.
Haemonetics’ stock has risen 10.8% in the past year. Earnings estimates for Haemonetics have increased from $3.86 to $3.89 for 2023 and from $4.11 to $4.15 for 2024 in the past 30 days.
HAE’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 16.1%. In the last reported quarter, it posted an earnings surprise of 5.3%.
Estimates for DexCom’s 2023 earnings per share have increased from $1.43 to $1.44 in the past 30 days. Shares of the company have increased 7.4% in the past year compared with the industry’s rise of 2.2%.
DXCM’s earnings surpassed estimates in each ofthe trailing four quarters, the average surprise being 36.4%. In the last reported quarter, it delivered an average earnings surprise of 47.1%.