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Bio-Rad (BIO) Tops Earnings and Revenue Estimates in Q2

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Bio-Rad Laboratories, Inc. (BIO - Free Report) posted second-quarter 2018 adjusted earnings per share (EPS) of $1.64, which surpassed the Zacks Consensus Estimate of $1.35. Earnings surged 182.8% from the prior-year quarter.

Revenues in Detail

Revenues in the quarter totaled $575.9 million, beating the Zacks Consensus Estimate by 4.5%. Revenues improved 14.1% from the year-ago quarter and rose 11% at constant currency (cc).

Per management, solid demand across many of its key product lines led to double-digit growth in all three major geographies.

Segmental Analysis

Sales in the Life Sciences segment totaled $217.8 million, up 21.4% year over year and 18.9% at cc. Per management, the upside reflects growth in sales of cell biology, Digital PCR and food safety product lines. Further, the company continues to see increased demand for its process media product lines.

On a geographic basis, sales at cc were particularly strong in the United States, Europe and Asia, with a chunk coming from China.

Net sales at the Clinical Diagnostics in the second quarter were $354 million, up 9.9% on a year-over-year basis and 6.5% at cc. The upside indicates growth in immunology, blood typing and quality-control product lines.

Bio-Rad Laboratories, Inc. Price, Consensus and EPS Surprise

 

 

Per management, the impressive performance of the Clinical Diagnostics business was backed by a considerable rise in instrument placements for the blood typing market with unit volume more than doubling both sequentially and year over year.

Geographically, sales rose in the Americas, China and Europe.

Margins

Gross profit in the reported quarter totaled $301.7 million, up 10.4% from the prior-year quarter. Gross margin came in at 52.4%, down 180 basis points (bps). Per the company, changes in product mix toward higher instrument placements and costs related to the ongoing transition of European operations led to the decline in gross margin.

Adjusted gross margin came in at 53.4%, down 220 bps year over year.

Operating income grossed $43.8 million against operating loss of $1.7 million in the year-ago quarter.

Guidance Updated

For 2018, the company now projects revenue growth of approximately 4.0-4.5% compared with the previous range of 3.5-4.0% at cc. The Zacks Consensus Estimate for the same is pegged at $2.30 billion.

Full-year gross margin is still expected between 55.5% and 56%. Operating margin is projected at around 10%.

Our Take

Bio-Rad exited second-quarter 2018 on a solid note, with the year-over-year rise in earnings and revenues. Sales growth at the Clinical Diagnostics segment was impressive as well. The company also saw strong growth in the Life Science segment and in cell biology, Digital PCR and food safety product lines. Further, solid growth in geographies like North America, China and Asia Pacific reflects solid international presence. Improvement in operating income is a major positive. The raised revenue growth guidance is indicative of bright prospects.

However, challenges associated with the implementation of the global ERP system raise concerns.

Zacks Rank & Other Key Picks

Bio-Rad has a Zacks Rank #2 (Buy).

Other top-ranked stocks in the broader medical sector which reported solid results this earnings season are Intuitive Surgical (ISRG - Free Report) , Chemed Corporation (CHE - Free Report) and Align Technology, Inc. (ALGN - Free Report) . While Intuitive Surgical sports a Zacks Rank #1 (Strong Buy), Chemed and Align Technology carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Intuitive Surgical reported second-quarter 2018 adjusted EPS of $2.76, which beat the Zacks Consensus Estimate of $2.48. Revenues totaled $909.3 million, also surpassing the consensus estimate of $870 million.

Chemed reported second-quarter 2018 adjusted EPS of $2.81, which trumped the Zacks Consensus Estimate of $2.68. Revenues of $441.8 million edged past the Zacks Consensus Estimate of $432.3 million.

Align Technology posted second-quarter 2018 adjusted EPS of $1.30, steering past the Zacks Consensus Estimate of $1.09. Revenues came in at $490.3 million, beating the consensus estimate of $462.9 million.

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