IDEXX Laboratories, Inc. (IDXX - Free Report) has been gaining investor confidence from consistently solid results. The stock has rallied 28.1% over a year, ahead of the S&P 500’s 13% growth and against the broader industry’s 1.1% decline.
Moreover, the company has a market cap of $19.07 billion. Its five-year expected growth rate is also favorable at 20.2% compared with the industry’s 16.7% tally.
Dwelling on solid prospects, this Zacks Rank #2 (Buy) player is an attractive bet for investors at the moment.
The company’s estimate revision trend for 2018 has also been positive. In the last 60 days, five analysts moved their estimates northward with no movement in the opposite direction. The consensus mark for current-year earnings has been raised around 11.4% to $4.11 per share.
Per our Style Score, IDEXX Laboratories sports a favorable Growth Score of B, reflective of the company’s strong fundamentals. Our research shows that stocks with an impressive Growth Style Score of A or B combined with a bullish Zacks Rank #1 (Strong Buy) or 2 offer the best upside potential.
Accordingly, IDEXX Laboratories has an encouraging net margin (net income/sales) of 13.9% as well against the industry’s negative 14.9%. Also, the company’s sale to assets ratio of 1.26 compared with the industry’s 0.63 makes it a sturdy growth pick.
Let’s find out is the recent positive momentum is sustainable or not.
The company is a leading manufacturer of products and services, primarily for the companion animal veterinary, livestock and poultry. It exited the first quarter of 2018 on a commendable note with better-than-expected earnings and revenue performances.
The stock’s stellar performance was driven by robust sales at the CAG (Companion Animal Group) business. In the first quarter, CAG revenues rose 13% organically year over year, supported by CAG Diagnostics’ recurring organic revenue growth.
Moreover, IDEXX VetLab consumables organic revenue growth was firm on the back of an expanding premium instrument base in the United States and the international markets, including growth in competitive instrument placements, increasing utilization and a consistent customer retention.
Notably, in January 2018, the company made Catalyst SDMA Test available in North America. With this, IDEXX’s point-of-care customers will now be able to add SDMA as an essential element to the routine chemistry panel. Apart from the United States and Canada, IDEXX expects to launch the Catalyst SDMA Test in other parts of the world over the next several months.
Continuing with a slew of developments, IDEXX Laboratories entered into a global agreement in January with the diagnostic company called Applied BioCode. Per the deal, IDEXX Laboratories will bring its Reference Laboratories customers on the digital multiplex platform built by Applied BioCode. Management aims at commercially launching this technology in 2019.
The companion animal market fundamentals remain consolidated on the global runway for tremendous growth. Management’s innovation-based, multi-modality global strategy accelerated the recurrent CAG Diagnostics revenue growth in the reported quarter. Moreover, a substantial top-line rise was contributed by considerable contributions from other business segments. Furthermore, a raised guidance for 2018 bottom line per share instills confidence in the stock.
We are also optimistic about the company witnessing double-digit organic revenue growth in its international business. This upside indicated steady consumable revenue gains riding on Catalyst instrument base and average testing utilization.
Additionally, the company boasts a secure cash balance, allowing it to carry out share repurchases.
Meanwhile, IDEXX Laboratories’ heavy dependence on third-party distributors raises a concern. Moreover, a rigid competitive landscape in the domestic and overseas markets weighs on the company’s margin.
Other Key Picks
A few other top-ranked stocks in the broader medical space are Abiomed, Inc. (ABMD - Free Report) , Genomic Health, Inc. (GHDX - Free Report) and Intuitive Surgical (ISRG - Free Report) .
Abiomed has an estimated long-term earnings growth rate of 27%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Genomic Health has an expected earnings growth rate of 187.5%. The stock has a Zacks Rank of 1.
Intuitive Surgical has an expected long-term earnings growth rate of 12.1% and is a Zacks #1 Ranked stock.
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