IDEXX Laboratories, Inc (IDXX - Free Report) has been gaining investor’s confidence through consistent positive results. The stock has rallied 40.1% over the last year, ahead of the S&P 500’s 14.4% gain and the broader industry’s 4.5% rise.
Moreover, this leading manufacturer of products and services primarily for the companion animal veterinary, livestock and poultry has a market cap of $13.83 billion. The company’s five-year historical growth rate is also favorable at 12.8% compared with 9.5% of the industry.
With solid prospects, this Zacks Rank #2 (Buy) stock is an attractive pick for investors at the moment.
The company’s estimate revision trend for the current year has been positive. In the past 60 days, five analysts revised their estimates upward, with no movement in the opposite direction. The magnitude of estimate revision for earnings increased around 3.9% to $3.17 per share over the same time frame.
Also per our Zacks Style Score system, IDEXX Laboratories sports a Growth Score of A which suggests the company’s strong growth prospects.
Our research shows that stocks with a Growth Style Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer the best upside potential.
In this regard, IDEXX Laboratories has a favorable Net Margin (Net Income/ Sales) of 14.1%, as against the industry’s negative 24%. The company’s sales to assets ratio of 1.19, compared with the industry’s ratio of 0.64, signifies it as a solid growth stock. Moreover, the projected sales growth rate of 10.1% surpassed the industry’s rate of 7.2%.
Let’s find out whether the recent positive trend is a sustainable one.
IDEXX Laboratories continues to display strong growth with respect to international expansion. The company has been significantly benefitting from the companion animal market of emerging nations, demonstrating bountiful opportunities.
The stellar topline performance over the past few quarters was driven by the company’s companion animal business. The companion animal market fundamentals remain solid with tremendous global runway for growth. In the last-reported second quarter, management’s unique innovation-based, multi-modality global strategy, enabled by enhanced commercial capability, accelerated recurring CAG Diagnostics revenue growth. Moreover, the strong top-line growth in this quarter was driven by considerable contributions from other business segments.
Also, IDEXX Laboratories recently announced the addition of rVetLink to its portfolio of technology applications.
Additionally, the company has a strong cash balance that enables it to carry out share repurchase programs and in turn provide solid returns to investors.
On the flip side, foreign currency fluctuation is a major headwind for the company. Another concern is the company’s high reliance on third-party distributors. IDEXX Laboratories faces higher operating expenses pertaining to increased head count, portfolio expansion and higher investments targeted toward geographical expansion in the United States and internationally. Moreover, the competitive landscape in the domestic and overseas markets weighs on the company’s performance.
Other Key Picks
Other top-ranked medical stocks are Edwards Lifesciences Corp. (EW - Free Report) , Chemed Corp. and Amedisys, Inc. (AMED - Free Report) . Edwards Lifesciences sports a Zacks Rank #1 (Strong Buy), while Chemed and Amedisys carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. The stock has rallied roughly 19.5% over the last six months.
Amedisys has a long-term expected earnings growth rate of 18.2%. The stock has gained 3.5% over the last six months.
Chemed has a long-term expected earnings growth rate of 10%. The stock has gained 3.3% over the last six months.
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