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IDEXX (IDXX) Up 3% Since Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for IDEXX Laboratories, Inc. (IDXX - Free Report) . Shares have added nearly 3% in the past month, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
IDEXX Laboratories Beats Q1 Earnings, Raises View
IDEXX Laboratories Inc. recorded first-quarter 2017 earnings per share (EPS) of $0.77, up 51% (up 53% at constant exchange rate or CER) year over year on a reported basis. The Zacks Consensus Estimate for earnings was pegged at $0.61 per share.
Strong top-line growth in the first quarter drove the upside in earnings.
Revenues in Detail
IDEXX’s first-quarter 2017 revenues rose 11% year over year (same on organic basis) to $462.0 million, beating the Zacks Consensus Estimate of $455 million.
The year-over-year increase was driven by strong global gains in Companion Animal Group (CAG) Diagnostics recurring revenues, including double-digit organic revenue gains across consumable, reference lab and rapid assay revenues, as well as continued expansion of IDEXX's premium instrument installed base.
Segmental Analysis
IDEXX derives revenues from four operating segments: CAG; Water; Livestock, Poultry and Dairy (LPD), and Other.
In the first quarter, CAG revenues rose 13% (13.4% organically) year over year to $403.2 million. The Water segment’s revenues were up 6.5% from the prior-year quarter (7.3% organically) to $25.0 million. LPD revenues, however, decreased 5% (down 4.6% organically) to $29.3 million. Meanwhile, revenues at the Other segment deteriorated 20% (down 19.9% organically) to $4.4 million.
Margins
Gross profit increased 13.5% to $258.2 million in the reported quarter. However, gross margin expanded 139 basis points (bps) to 55.8% despite a 7.3% rise in cost of revenue to $203.8 million.
Sales and marketing expenses increased 9.3% to $87.2 million while general and administrative expenses rose 7.3% to $52.9 million. Research and development expenses increased 4.7% to $25.7 million. Overall, operating margin in the quarter improved 229 bps to 19.9%.
Financial Position
IDEXX exited the first quarter of 2017 with cash and cash equivalents of $160.4 million, up from $154.9 million at the end of fiscal 2016. As of Mar 31, 2017, net operating cash flow was $31.2 million, compared with $26.9 in the prior year.
2017 Guidance
IDEXX raised its 2017 revenue outlook by $15 million to the range of $1,925--$1,950 million, reflecting organic revenue growth expectations between 9.5% and 11%. The Zacks Consensus Estimate for 2017 revenues is pegged at $1.92 billion, within the guided range.
Management also raised its EPS guidance to $2.95--$3.11 per sharefrom the earlier range of $2.85–$3.01, supported by continued operating margin expansion aligned with its long-term goals. The updated outlook represents EPS growth of 21 on a reported basis.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been three revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 5.7% due to these changes.
At this time, IDEXX's stock has an average Growth Score of 'C', though it is lagging a lot on the momentum front with an 'F'. Charting a somewhat similar path, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for growth based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Interestingly, the stock has a Zacks Rank #2 (Buy). We are looking for an above average return from the stock in the next few months.
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IDEXX (IDXX) Up 3% Since Earnings Report: Can It Continue?
It has been about a month since the last earnings report for IDEXX Laboratories, Inc. (IDXX - Free Report) . Shares have added nearly 3% in the past month, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
IDEXX Laboratories Beats Q1 Earnings, Raises View
IDEXX Laboratories Inc. recorded first-quarter 2017 earnings per share (EPS) of $0.77, up 51% (up 53% at constant exchange rate or CER) year over year on a reported basis. The Zacks Consensus Estimate for earnings was pegged at $0.61 per share.
Strong top-line growth in the first quarter drove the upside in earnings.
Revenues in Detail
IDEXX’s first-quarter 2017 revenues rose 11% year over year (same on organic basis) to $462.0 million, beating the Zacks Consensus Estimate of $455 million.
The year-over-year increase was driven by strong global gains in Companion Animal Group (CAG) Diagnostics recurring revenues, including double-digit organic revenue gains across consumable, reference lab and rapid assay revenues, as well as continued expansion of IDEXX's premium instrument installed base.
Segmental Analysis
IDEXX derives revenues from four operating segments: CAG; Water; Livestock, Poultry and Dairy (LPD), and Other.
In the first quarter, CAG revenues rose 13% (13.4% organically) year over year to $403.2 million. The Water segment’s revenues were up 6.5% from the prior-year quarter (7.3% organically) to $25.0 million. LPD revenues, however, decreased 5% (down 4.6% organically) to $29.3 million. Meanwhile, revenues at the Other segment deteriorated 20% (down 19.9% organically) to $4.4 million.
Margins
Gross profit increased 13.5% to $258.2 million in the reported quarter. However, gross margin expanded 139 basis points (bps) to 55.8% despite a 7.3% rise in cost of revenue to $203.8 million.
Sales and marketing expenses increased 9.3% to $87.2 million while general and administrative expenses rose 7.3% to $52.9 million. Research and development expenses increased 4.7% to $25.7 million. Overall, operating margin in the quarter improved 229 bps to 19.9%.
Financial Position
IDEXX exited the first quarter of 2017 with cash and cash equivalents of $160.4 million, up from $154.9 million at the end of fiscal 2016. As of Mar 31, 2017, net operating cash flow was $31.2 million, compared with $26.9 in the prior year.
2017 Guidance
IDEXX raised its 2017 revenue outlook by $15 million to the range of $1,925--$1,950 million, reflecting organic revenue growth expectations between 9.5% and 11%. The Zacks Consensus Estimate for 2017 revenues is pegged at $1.92 billion, within the guided range.
Management also raised its EPS guidance to $2.95--$3.11 per sharefrom the earlier range of $2.85–$3.01, supported by continued operating margin expansion aligned with its long-term goals. The updated outlook represents EPS growth of 21 on a reported basis.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been three revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 5.7% due to these changes.
IDEXX Laboratories, Inc. Price and Consensus
IDEXX Laboratories, Inc. Price and Consensus | IDEXX Laboratories, Inc. Quote
VGM Scores
At this time, IDEXX's stock has an average Growth Score of 'C', though it is lagging a lot on the momentum front with an 'F'. Charting a somewhat similar path, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for growth based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Interestingly, the stock has a Zacks Rank #2 (Buy). We are looking for an above average return from the stock in the next few months.