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Here's Why You Should Retain IDEXX (IDXX) Stock for Now
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IDEXX Laboratories, Inc. (IDXX - Free Report) is likely to grow in the coming quarters, backed by the sustained success of CAG’s recurring diagnostic products and services. The company’s international business performance is gaining from its expanded global commercial capability. However, IDEXX’s operations are prone to macroeconomic challenges and foreign exchange fluctuations.
In the past year, this Zacks Rank #3 (Hold) stock has increased 8.9% compared with the 3.7% rise of the industry and 22.1% growth of the S&P 500 composite.
The renowned medical device company has a market capitalization of $46.56 billion. IDEXX has an estimated long-term earnings growth rate of 16.4% compared with the industry’s 13.46. IDXX’s earnings surpassed estimates in each of the trailing four quarters, delivering an average positive surprise of 8.30%.
Let’s delve deeper.
Tailwinds
CAG Continues to Perform Well: Investors are optimistic about the continued growth of IDEXX's CAG business. In the fourth quarter of 2023, CAG Diagnostics' recurring revenues increased 10% organically, supported by an average global net price improvement of 6-7%. Consistent with the past quarters, the upside remained solidly above sector growth levels. The results, supported by the sustained benefits from execution drivers, reflected a sequential improvement from the third-quarter volume growth levels and was the strongest normalized volume growth quarter in 2023.
Strong Global Performance: A key element of IDEXX’s customer engagement strategy is the expansion of its commercial footprint in a disciplined approach. In late 2023, the company made its latest commercial expansion in the United States, the first in four years. It complements the seven targeted international expansions that IDEXX advanced since 2021 across various countries worldwide. IDEXX achieved solid organic gains across major testing modalities in the fourth quarter of 2023. IDEXX VetLab consumable revenues witnessed double-digit organic gains across the United States and international regions.
ProCyte One: A Long-Term Growth Component: IDEXX's expanding installed base in hematology not only facilitates the flow-through of recurring revenues but also propels the clinic business. Additionally, ProCyte One supports the company’s long-term growth goal in international markets where most veterinarians are qualified to perform hematology testing when determining a patient's general health. In 2023, ProCyte One momentum continued to be strong, contributing to the expansion of the global premium instrument installed base.
Downsides
Macroeconomic Headwinds Put Bottom Line Pressure: Global macroeconomic conditions, including inflation, supply chain disruptions, fluctuations in foreign currency exchange rates, and volatility in capital markets, could continue to affect IDEXX’s results of operations adversely. These challenges and the geopolitical instability, including the current war in Ukraine, have affected IDEXX’s supply chain operations globally.
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Foreign Exchange Headwind: The majority of IDEXX’s consolidated revenues are derived from the sale of products in international markets (international revenue accounts for 34.7% of total revenue in 2023). 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 on profits from products manufactured in the U.S. and sold internationally. In 2023, foreign exchange reduced operating profits by $25 million (operating margin gains by 60 basis points) and EPS by 24 cents per share.
Estimate Trend
The Zacks Consensus Estimate for IDEXX’s 2024 earnings per share (EPS) has moved up from $10.98 to $11.13 in the past 60 days.
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $3.99 billion. This suggests a 9% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks from the broader medical space are Stryker Corporation (SYK - Free Report) , Cencora, Inc. (COR - Free Report) and Cardinal Health (CAH - Free Report) .
Stryker, carrying a Zacks Rank #2 (Buy), reported a fourth-quarter 2023 adjusted EPS of $3.46, beating the Zacks Consensus Estimate by 5.8%. Revenues of $5.8 billion outpaced the consensus estimate by 3.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stryker has an estimated earnings growth rate of 11.5% for 2025 compared with the S&P 500’s 9.9%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 5.1%.
Cencora, carrying a Zacks Rank #2, reported a first-quarter fiscal 2024 adjusted EPS of $3.28, which beat the Zacks Consensus Estimate by 14.7%. Revenues of $72.3 billion outpaced the Zacks Consensus Estimate by 5.1%.
COR has an earnings yield of 5.75% compared with the industry’s 1.85%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 6.7%.
Cardinal Health reported second-quarter fiscal 2024 adjusted earnings of $1.82, which beat the Zacks Consensus Estimate by 16.7%. Revenues of $57.45 billion improved 11.6% on a year-over-year basis and also topped the Zacks Consensus Estimate by 1.1%.
CAH has a long-term estimated earnings growth rate of 15.3% compared with the industry’s 11.8% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 15.6%.
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Here's Why You Should Retain IDEXX (IDXX) Stock for Now
IDEXX Laboratories, Inc. (IDXX - Free Report) is likely to grow in the coming quarters, backed by the sustained success of CAG’s recurring diagnostic products and services. The company’s international business performance is gaining from its expanded global commercial capability. However, IDEXX’s operations are prone to macroeconomic challenges and foreign exchange fluctuations.
In the past year, this Zacks Rank #3 (Hold) stock has increased 8.9% compared with the 3.7% rise of the industry and 22.1% growth of the S&P 500 composite.
The renowned medical device company has a market capitalization of $46.56 billion. IDEXX has an estimated long-term earnings growth rate of 16.4% compared with the industry’s 13.46. IDXX’s earnings surpassed estimates in each of the trailing four quarters, delivering an average positive surprise of 8.30%.
Let’s delve deeper.
Tailwinds
CAG Continues to Perform Well: Investors are optimistic about the continued growth of IDEXX's CAG business. In the fourth quarter of 2023, CAG Diagnostics' recurring revenues increased 10% organically, supported by an average global net price improvement of 6-7%. Consistent with the past quarters, the upside remained solidly above sector growth levels. The results, supported by the sustained benefits from execution drivers, reflected a sequential improvement from the third-quarter volume growth levels and was the strongest normalized volume growth quarter in 2023.
Strong Global Performance: A key element of IDEXX’s customer engagement strategy is the expansion of its commercial footprint in a disciplined approach. In late 2023, the company made its latest commercial expansion in the United States, the first in four years. It complements the seven targeted international expansions that IDEXX advanced since 2021 across various countries worldwide. IDEXX achieved solid organic gains across major testing modalities in the fourth quarter of 2023. IDEXX VetLab consumable revenues witnessed double-digit organic gains across the United States and international regions.
ProCyte One: A Long-Term Growth Component: IDEXX's expanding installed base in hematology not only facilitates the flow-through of recurring revenues but also propels the clinic business. Additionally, ProCyte One supports the company’s long-term growth goal in international markets where most veterinarians are qualified to perform hematology testing when determining a patient's general health. In 2023, ProCyte One momentum continued to be strong, contributing to the expansion of the global premium instrument installed base.
Downsides
Macroeconomic Headwinds Put Bottom Line Pressure: Global macroeconomic conditions, including inflation, supply chain disruptions, fluctuations in foreign currency exchange rates, and volatility in capital markets, could continue to affect IDEXX’s results of operations adversely. These challenges and the geopolitical instability, including the current war in Ukraine, have affected IDEXX’s supply chain operations globally.
Foreign Exchange Headwind: The majority of IDEXX’s consolidated revenues are derived from the sale of products in international markets (international revenue accounts for 34.7% of total revenue in 2023). 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 on profits from products manufactured in the U.S. and sold internationally. In 2023, foreign exchange reduced operating profits by $25 million (operating margin gains by 60 basis points) and EPS by 24 cents per share.
Estimate Trend
The Zacks Consensus Estimate for IDEXX’s 2024 earnings per share (EPS) has moved up from $10.98 to $11.13 in the past 60 days.
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $3.99 billion. This suggests a 9% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks from the broader medical space are Stryker Corporation (SYK - Free Report) , Cencora, Inc. (COR - Free Report) and Cardinal Health (CAH - Free Report) .
Stryker, carrying a Zacks Rank #2 (Buy), reported a fourth-quarter 2023 adjusted EPS of $3.46, beating the Zacks Consensus Estimate by 5.8%. Revenues of $5.8 billion outpaced the consensus estimate by 3.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stryker has an estimated earnings growth rate of 11.5% for 2025 compared with the S&P 500’s 9.9%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 5.1%.
Cencora, carrying a Zacks Rank #2, reported a first-quarter fiscal 2024 adjusted EPS of $3.28, which beat the Zacks Consensus Estimate by 14.7%. Revenues of $72.3 billion outpaced the Zacks Consensus Estimate by 5.1%.
COR has an earnings yield of 5.75% compared with the industry’s 1.85%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 6.7%.
Cardinal Health reported second-quarter fiscal 2024 adjusted earnings of $1.82, which beat the Zacks Consensus Estimate by 16.7%. Revenues of $57.45 billion improved 11.6% on a year-over-year basis and also topped the Zacks Consensus Estimate by 1.1%.
CAH has a long-term estimated earnings growth rate of 15.3% compared with the industry’s 11.8% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 15.6%.