It has been about a month since the last earnings report for Qiagen (QGEN - Free Report) . Shares have added about 8.1% 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 catalysts.
QIAGEN Beats Earnings in Q3, Molecular Diagnostics Unit Strong
QIAGEN's fourth-quarter 2018 adjusted earnings per share (EPS) came in at 40 cents, down 6.9% year over year. Meanwhile, the figure was in line with the Zacks Consensus Estimate. At constant exchange rate or CER, the company reported adjusted earnings of 41 cents per share.
For the full year, adjusted EPS totaled $1.34, reflecting a 5.5% rise from the year-ago period. Also, the adjusted number exceeded the Zacks Consensus Estimate by a penny.
Revenues in Detail
Net sales at actual rates in the fourth quarter inched up 1.6% on a year-over-year basis to $403.2 million (up 5% at CER). However, the top line missed the Zacks Consensus Estimate by 1.4%.
For 2018, net sales were $1.50 billion, indicating a 5.9% increase over the 2017 figure. However, the same lagged the Zacks Consensus Estimate of $1.51 billion.
Geographical Revenue Update
Sales from the Americas (41.9% of revenues) declined 4% on a reported basis and revenues from Europe-Middle East-Africa (35.5%) increased 7% reportedly (up 13% at CER). Further, revenues from Asia-Pacific/Japan (22.6%) rose 5% year over year on a reported basis (up 8% at CER).
QIAGEN primarily generates revenues through Molecular Diagnostics, Applied Testing, Pharma and Academia, representing 48%, 10%, 18% and 24% of net sales, respectively, in the reported quarter.
Molecular diagnostics sales were up 5% at CER. Sales derived from Applied Testing rose 1% at CER. Pharma sales climbed 5% at CER in the fourth quarter and Academia sales improved 6% on growing demand.
Gross profit in the quarter under review increased 1.3% to $264.8 million. In spite of that, gross margin contracted 17% on account of a 2.1% rise on cost of sales to $138.4 million.
Adjusted operating income (excluding items like Acquisition-related intangible amortization) soared 82.9% year over year to $97.7 million in the fourth quarter. Adjusted operating margin expanded 1078 basis points to 24.2%.
QIAGEN exited 2018 with cash and cash equivalents of $1.39 billion, up from $1.02 billion at the end of 2017. Full-year net cash provided by operating activities was $359.5 million compared with $286.8 million a year ago. Moreover, the company reported free cash flow of $249.7 million in 2018 compared with $196.7 million in the year-earlier period.
QIAGEN announced a new commitment in January 2018 to return shareholders $200 million via open-market repurchases. Notably, its shares get repurchased on the Frankfurt Stock Exchange. Through December 2018, the company bought back a total of 3.4 million shares (approximately $124 million at current exchange rates).
QIAGEN has provided its 2019 guidance. Total net sales growth is expected in the range of about 7-8% at CER on the back of a strong portfolio expansion with about $30 million of contributions coming in from QIAstat-Dx.The Zacks Consensus Estimate for 2019 revenues is pegged at $1.60 billion.
Adjusted EPS guidance for the full year is anticipated in the band of $1.45-1.47 at CER. The Zacks Consensus Estimate for 2019 EPS is pegged at $1.46.
The company also issued the financial projection for the first quarter of 2019. Net sales are envisioned to grow around 5-6% at CER. Adjusted EPS is predicted within 26-27 cents at CER on an underlying basis. The Zacks Consensus Estimate for earnings stands at 27 cents, matching the upper end of the guided range. Our consensus estimate for revenues is pegged at $348.7 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
Currently, Qiagen has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Qiagen has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.