We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Can CAG Growth Continue to Aid IDEXX (IDXX) in Q2 Earnings?
Read MoreHide Full Article
IDEXX Laboratories, Inc. (IDXX - Free Report) is scheduled to report second-quarter 2018 results on Aug 1, before the opening bell. Last reported quarter, the company delivered a positive earnings surprise of 8.6%. Notably, the stock has outperformed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 7.79%.
Let’s take a look at how things are shaping up prior to this announcement.
Key Catalysts
IDEXX is expected to continue with its gain momentum in the second quarter, courtesy of a strong global rise in Companion Animal Group (CAG) Diagnostics’ revenues. In first quarter, this upside was driven by strong consistent gains from recurring CAG revenues, high premium CAG instrument placements and continued high growth in digital business. Management vouches for this trend to be further retained.
We are also upbeat about IDEXX enhancing its commercial capabilities in the United States to maintain recurring revenue growth at CAG Diagnostics. We expect second-quarter results to reflect an increase in productivity as new sales representatives establish fresh customer relationships. Also, we anticipate the company to report solid growth in the recurring software services associated with practice management platforms and improved digital system placements.
The Zacks Consensus Estimate of $499 million for CAG Diagnostics revenues represents a 13.4% improvement over the last reported quarter.
Notably, IDEXX’s 12-13.5% revenue growth projection for the quarter to be reported highlights its organic gains of 10.5-11.5%. Overall, the consensus estimate for the total quarterly revenues is pegged at $574.95 million.
Other factors predicted to influence IDEXX’s second-quarter results are:
We pin considerable hopes on progress in the Water Business, lying on a growth trajectory of late, backed by encouraging test results in the United States as well as benefits drawn from the global go-direct initiatives. Moreover, the business witnessed 12% organic growth last quarter. Management also eyes gains from two favorable regulatory developments pertaining to wastewater in the United States and drinking water in Europe along with benefits from Brazil go-direct initiative. The company earlier stated that it is perfectly on track for a continued high-single digit organic revenue boost in this business through 2018. The consensus mark for Water revenues stands at $32.8 million for the yet-to-be-reported quarter.
IDEXX continues to expand its global footprint. It has been significantly earning advantages from the bountiful opportunities in the emerging companion animal diagnostics markets. Further, management’s consistent share buybacks underscores its robust free cash flow reserve. We believe the outcome of these endeavors will bear reflection on second-quarter conference call.
On the flip side, foreign currency fluctuation is a major headwind. Another concern is the company’s heavy reliance on third-party distributors. The purchasing dynamics of distributors leave a significant impact on the company’s sales of instrument consumables as well as its rapid assay products. Moreover, IDEXX has been witnessing a rise in operating expenses due to increased head count along with higher investments in portfolio development as well as expansion in the United States and internationally.
Additionally, a competitive landscape in the domestic and overseas markets weighs on IDEXX’s performance. Thus, the struggle to gain market traction might be a drag, which in turn, might hurt second-quarter results.
Here’s what the quantitative model predicts:
Per the proven Zacks model, a company with a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has higher chances of beating estimates if it also has a positive Earnings ESP.
IDEXX has a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s Earnings ESP of -1.55% leaves our surprise prediction inconclusive.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are a few medical stocks worth considering with the right combination of elements to beat on earnings this time around:
Baxter International Inc. (BAX - Free Report) has an Earnings ESP of +0.90% and a Zacks Rank #2.
BioScrip, Inc. has an Earnings ESP of +3.22% and a Zacks Rank of 2.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Can CAG Growth Continue to Aid IDEXX (IDXX) in Q2 Earnings?
IDEXX Laboratories, Inc. (IDXX - Free Report) is scheduled to report second-quarter 2018 results on Aug 1, before the opening bell. Last reported quarter, the company delivered a positive earnings surprise of 8.6%. Notably, the stock has outperformed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 7.79%.
Let’s take a look at how things are shaping up prior to this announcement.
Key Catalysts
IDEXX is expected to continue with its gain momentum in the second quarter, courtesy of a strong global rise in Companion Animal Group (CAG) Diagnostics’ revenues. In first quarter, this upside was driven by strong consistent gains from recurring CAG revenues, high premium CAG instrument placements and continued high growth in digital business. Management vouches for this trend to be further retained.
We are also upbeat about IDEXX enhancing its commercial capabilities in the United States to maintain recurring revenue growth at CAG Diagnostics. We expect second-quarter results to reflect an increase in productivity as new sales representatives establish fresh customer relationships. Also, we anticipate the company to report solid growth in the recurring software services associated with practice management platforms and improved digital system placements.
IDEXX Laboratories, Inc. Price and EPS Surprise
IDEXX Laboratories, Inc. Price and EPS Surprise | IDEXX Laboratories, Inc. Quote
The Zacks Consensus Estimate of $499 million for CAG Diagnostics revenues represents a 13.4% improvement over the last reported quarter.
Notably, IDEXX’s 12-13.5% revenue growth projection for the quarter to be reported highlights its organic gains of 10.5-11.5%. Overall, the consensus estimate for the total quarterly revenues is pegged at $574.95 million.
Other factors predicted to influence IDEXX’s second-quarter results are:
We pin considerable hopes on progress in the Water Business, lying on a growth trajectory of late, backed by encouraging test results in the United States as well as benefits drawn from the global go-direct initiatives. Moreover, the business witnessed 12% organic growth last quarter. Management also eyes gains from two favorable regulatory developments pertaining to wastewater in the United States and drinking water in Europe along with benefits from Brazil go-direct initiative. The company earlier stated that it is perfectly on track for a continued high-single digit organic revenue boost in this business through 2018. The consensus mark for Water revenues stands at $32.8 million for the yet-to-be-reported quarter.
IDEXX continues to expand its global footprint. It has been significantly earning advantages from the bountiful opportunities in the emerging companion animal diagnostics markets. Further, management’s consistent share buybacks underscores its robust free cash flow reserve. We believe the outcome of these endeavors will bear reflection on second-quarter conference call.
On the flip side, foreign currency fluctuation is a major headwind. Another concern is the company’s heavy reliance on third-party distributors. The purchasing dynamics of distributors leave a significant impact on the company’s sales of instrument consumables as well as its rapid assay products. Moreover, IDEXX has been witnessing a rise in operating expenses due to increased head count along with higher investments in portfolio development as well as expansion in the United States and internationally.
Additionally, a competitive landscape in the domestic and overseas markets weighs on IDEXX’s performance. Thus, the struggle to gain market traction might be a drag, which in turn, might hurt second-quarter results.
Here’s what the quantitative model predicts:
Per the proven Zacks model, a company with a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has higher chances of beating estimates if it also has a positive Earnings ESP.
IDEXX has a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s Earnings ESP of -1.55% leaves our surprise prediction inconclusive.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are a few medical stocks worth considering with the right combination of elements to beat on earnings this time around:
Align Technology, Inc. (ALGN - Free Report) has an Earnings ESP of +2.05% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Baxter International Inc. (BAX - Free Report) has an Earnings ESP of +0.90% and a Zacks Rank #2.
BioScrip, Inc. has an Earnings ESP of +3.22% and a Zacks Rank of 2.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>