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Abaxis (ABAX) Veterinary Prospects Bright: Should You Hold?
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On Jan 2, 2017, Abaxis Inc. , a leading manufacturer of portable medical and veterinary blood analysis systems, was upgraded to a Zacks Rank #3 (Hold).
Why the Upgrade?
We believe the upgrade was primarily driven by Abaxis’ rising share price in the last six months. The company generated a return of 9.1% last year, way better than the 7.4% decline of the Zacks classified Medical-Products industry. The company has also recorded a 5-year CAGR of 8.7% for revenues and an impressive long-term earnings growth rate of 17.6% versus the industry average of 5.5%.
Growth Drivers
Abaxis continues to expand in the veterinary market. The company has recorded solid sales from its veterinary business, which accounted for 82.4% of its total revenue in the last reported second quarter of fiscal 2017. Further, Abaxis witnessed growth in veterinary rotor sales outside North America, buoyed by strong performance in Asia and Latin America. Going forward, management expects to see growth in sales of its veterinary rotors in Asia Pacific.
The company is perfectly positioned to expand in the growing portable medical and veterinary blood analysis system market. Management also intends to tap into the huge potential of point-of-care diagnostic testing market. Recently, the company collaborated with the American Animal Hospital Association to develop a wellness testing initiative to improve veterinary blood work compliance and implement preventive care. Apart from this, Abaxis focuses on its Piccolo system, which is a portable, multiple routine test capability on whole blood, serum or plasma samples. In the reported quarter, Abaxis sold 208 Piccolos compared to 248 in the year-ago quarter. Earlier this year, the company sold 10 Piccolos to India for the first time, displaying Abaxis’ efforts to expand in the emerging markets.
We also expect the distribution relationship with Henry Schein Animal Health, Patterson Veterinary Supply, MWI Vet and Abbott Point of Care to fortify the company’s market presence in North America as well as Europe. Abaxis’ focus and investment in North America and overseas should support growth in the future.
Of the notable developments, Abaxis’ global sales of medical rotors crossed 1 million units for the first time, which is a major milestone.
On the flip side,declining instruments sales resulted in a sluggish top-line performance during the last reported quarter. Also, Abaxis faced challenging year-over-year comparisons in North America due to poor veterinary rotors sales. Revenue and margin growth in the quarter failed to meet the company’s targeted double-digit growth expectation. Intense competition was also a major headwind.
Key Picks
Better-ranked medical stocks are NxStage Medical Inc. , Align Technology, Inc. (ALGN - Free Report) and Haemonetics Corporation (HAE - Free Report) . NxStage Medical and Align Technology sport a Zacks Rank #1 (Strong Buy) while Haemonetics carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NxStage Medical gained 24.5% over the last one year compared with the S&P 500’s 11.2%. The company has a four-quarter average positive earnings surprise of 46.3%.
Align Technology rallied 49.6% over the last one year, way better than the S&P 500. It has a trailing four-quarter average positive earnings surprise of 23%.
Haemonetics recorded a 28.6% gain over the past one year, better than the S&P 500. It has a trailing four-quarter average positive earnings surprise of 0.82%.
Zacks' Top 10 Stocks for 2017
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Abaxis (ABAX) Veterinary Prospects Bright: Should You Hold?
On Jan 2, 2017, Abaxis Inc. , a leading manufacturer of portable medical and veterinary blood analysis systems, was upgraded to a Zacks Rank #3 (Hold).
Why the Upgrade?
We believe the upgrade was primarily driven by Abaxis’ rising share price in the last six months. The company generated a return of 9.1% last year, way better than the 7.4% decline of the Zacks classified Medical-Products industry. The company has also recorded a 5-year CAGR of 8.7% for revenues and an impressive long-term earnings growth rate of 17.6% versus the industry average of 5.5%.
Growth Drivers
Abaxis continues to expand in the veterinary market. The company has recorded solid sales from its veterinary business, which accounted for 82.4% of its total revenue in the last reported second quarter of fiscal 2017. Further, Abaxis witnessed growth in veterinary rotor sales outside North America, buoyed by strong performance in Asia and Latin America. Going forward, management expects to see growth in sales of its veterinary rotors in Asia Pacific.
The company is perfectly positioned to expand in the growing portable medical and veterinary blood analysis system market. Management also intends to tap into the huge potential of point-of-care diagnostic testing market. Recently, the company collaborated with the American Animal Hospital Association to develop a wellness testing initiative to improve veterinary blood work compliance and implement preventive care. Apart from this, Abaxis focuses on its Piccolo system, which is a portable, multiple routine test capability on whole blood, serum or plasma samples. In the reported quarter, Abaxis sold 208 Piccolos compared to 248 in the year-ago quarter. Earlier this year, the company sold 10 Piccolos to India for the first time, displaying Abaxis’ efforts to expand in the emerging markets.
We also expect the distribution relationship with Henry Schein Animal Health, Patterson Veterinary Supply, MWI Vet and Abbott Point of Care to fortify the company’s market presence in North America as well as Europe. Abaxis’ focus and investment in North America and overseas should support growth in the future.
Of the notable developments, Abaxis’ global sales of medical rotors crossed 1 million units for the first time, which is a major milestone.
On the flip side,declining instruments sales resulted in a sluggish top-line performance during the last reported quarter. Also, Abaxis faced challenging year-over-year comparisons in North America due to poor veterinary rotors sales. Revenue and margin growth in the quarter failed to meet the company’s targeted double-digit growth expectation. Intense competition was also a major headwind.
Key Picks
Better-ranked medical stocks are NxStage Medical Inc. , Align Technology, Inc. (ALGN - Free Report) and Haemonetics Corporation (HAE - Free Report) . NxStage Medical and Align Technology sport a Zacks Rank #1 (Strong Buy) while Haemonetics carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NxStage Medical gained 24.5% over the last one year compared with the S&P 500’s 11.2%. The company has a four-quarter average positive earnings surprise of 46.3%.
Align Technology rallied 49.6% over the last one year, way better than the S&P 500. It has a trailing four-quarter average positive earnings surprise of 23%.
Haemonetics recorded a 28.6% gain over the past one year, better than the S&P 500. It has a trailing four-quarter average positive earnings surprise of 0.82%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>