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Qiagen (QGEN) Up 4.7% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Qiagen (QGEN - Free Report) . Shares have added about 4.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Qiagen due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

QIAGEN’s second-quarter 2018 adjusted earnings per share (EPS) came in at 33 cents, up 10% year over year. The figure beat the Zacks Consensus Estimate of 32 cents. At constant exchange rate or CER, the company reported adjusted earnings of 33 cents.

Revenues in Detail

Net sales at actual rates in the second quarter grew 8.1% on a year-over-year basis to $377.2 million (6% at CER). Also, the top line surpassed the Zacks Consensus Estimate of $376.9 million.

Region-wise, sales from the Americas (48% of revenues) grew 10% at CER, while revenues from Europe-Middle East-Africa (32%) increased 4%. Further, revenues from Asia-Pacific/Japan (20%) rose 1% year over year.

Segments in Detail

QIAGEN primarily generates revenues through Molecular Diagnostics, Applied Testing, Pharma and Academia, which represented 49%, 9%, 20% and 22% of net sales, respectively, during the reported quarter.

Molecular diagnostics sales were up 10% at CER. Sales derived from Applied Testing declined by 3% at CER. Pharma sales rose 4% at CER in the second quarter and Academia sales improved 4% on growing demand.

Operational Update

Adjusted operating income (excluding restructuring charges) increased 14.8% year over year to $101 million in the second quarter. However, adjusted operating margin expanded 160 basis points to 26.8%.

Financial Update

QIAGEN exited the second quarter with cash and cash equivalents of $674.4 million, down from $814.9 million at the end of the first quarter of 2018. Net cash from operating activities in the first six months of 2018 was $166.2 million, up from $129.5 million in the year-ago period. Moreover, the company reported free cash flow of $123.4 million for the first six months compared with $91.6 million in the year-ago period.

QIAGEN announced a new commitment in January to return $200 million to shareholders via open-market repurchases, after returning $300 million to shareholders by the end of 2017. Notably, shares will be repurchased on the Frankfurt Stock Exchange. As of Jul 27, 2018, the company has bought back a total of 1.1 million shares on the Frankfurt Stock Exchange for EUR 35.0 million (approximately $40.7 million).

2018 Guidance

QIAGEN has maintained its 2018 guidance for total net sales growth at about 6-7% at CER. This guidance considers a drop in U.S. HPV test sales to have an adverse impact of around 1.5% on total net sales growth in 2018. Further, sales of about $7 million during the second half of 2018 from the acquisition of STAT-Dx was taken into account. The Zacks Consensus Estimate for 2018 revenues is pegged at $1.54 billion.

Moreover, the adjusted EPS guidance has been reiterated at $1.31-$1.33 at CER. Our consensus estimate for 2018 earnings of $1.33 is at the high end of the guided range.

Further, currency movements are expected to have a positive impact on 2018 net sales growth of up to 1% and an adverse impact of about a penny per share on adjusted EPS.

The company also provided the financial guidance for the third quarter of 2018. Net sales are expected to grow around 6% at CER. Adjusted EPS is expected at 33-34 cents at CER on an underlying basis. The Zacks Consensus Estimate for earnings stands at 34 cents per share, coinciding with the high end of the company’s guided range. Our consensus estimate for revenues is pegged at $391.9 million.

Further, currency movements are expected to have a negative impact on third-quarter 2018 net sales growth of up to 2% and up to a penny on adjusted EPS.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, Qiagen has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is equally suitable for value, growth, and momentum investors.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Qiagen has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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