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Abaxis Banks on Strong Veterinary Business Amid Margin Woes

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On Mar 5, we issued an updated research report on Abaxis, Inc. . The company has been witnessing strength in the Veterinary business based on encouraging consumable segment’s growth. However, rising expenses along with a bleak gross and operating margin scenario have been raising concern. The stock carries a Zacks Rank #3 (Hold).

This manufacturer of portable Medical (human) and Veterinary (animal) blood analysis systems, providing clinicians with rapid blood constituent measurements in medical and veterinarian markets globally, has outperformed its industry in the past three months. The stock has gained 44.2% compared with the industry’s 4.1%.

We are upbeat about Abaxis’ double-digit consumable growth within the Veterinary business. Within the consumable product lines, total rotor revenues grew double-digits. This apart, other veterinary consumable, which includes hematology reagents, rapid assays, i-STAT cartridges, coagulation cartridges and urine analysis strips drove veterinary consumable revenues.

 

 

Moreover, Abaxis has been emphasizing on product innovation through research and development. In this regard, in January, the company received approval from USDA, Center for Veterinary Biologics, for VetScan FLEX4 Rapid Test.

Solid global sales of Piccolo instruments are encouraging. Per management, as healthcare delivery consolidates across the United States into these groups, networks and healthcare conglomerates, Abaxis’ Piccolo is positioned to capture the lion’s share of the diagnostic tests market.

Meanwhile, escalating operating expenses have been exerting pressure on the bottom line. Moreover, Abaxis faces intense competition in both the Medical and Veterinary markets. In this regard, the company competes against firms that have substantially greater resources on all fronts — financial, research and development (R&D) plus operations and marketing. 

Key Picks

A few better-ranked stocks in the broader medical sector are Bio-Rad Laboratories (BIO - Free Report) , PetMed Express (PETS - Free Report) and PerkinElmer .

Bio-Rad Laboratories sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.The company has a long-term expected earnings growth rate of 20%.

PetMed has a long-term expected earnings growth rate of 10% and boasts a Zacks Rank #1.

PerkinElmer has a long-term expected earnings growth rate of 12.3%. The stock carries a Zacks Rank #2 (Buy).

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