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What's in Store for IDEXX Laboratories' (IDXX) Q3 Earnings?

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IDEXX Laboratories, Inc. (IDXX - Free Report) is slated to report third-quarter 2019 results on Oct 31, before market open. In the last reported quarter, the company delivered a positive earnings surprise of 4.38%. IDEXX’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average positive surprise being 8.23%.

Let's take a look at how things are shaping up prior to this announcement.

Key Catalysts

IDEXX's strong earnings trajectory is expected to have continued through the third quarter, courtesy of a global surge in Companion Animal Group (CAG) Diagnostics revenues.

Of late, the company has been registering solid organic revenues in this segment on gains from consumable and reference lab as well as the growing acceptance of Rapid Assays, and Veterinary Software, Services and Diagnostic Imaging Systems.

In the United States, IDEXX has been generating strong CAG Diagnostic recurring revenues, led by steady growth in reference lab, consumables and rapid assay sales. Growth in the Veterinary Software portfolio can be attributed to strength in the global catalyst install base of Cornerstone, Neo and Animana systems. These trends are expected to have continued in the to-be-reported quarter.

IDEXX Laboratories, Inc. Price and EPS Surprise


IDEXX Laboratories, Inc. Price and EPS Surprise

IDEXX Laboratories, Inc. price-eps-surprise | IDEXX Laboratories, Inc. Quote

International reference laboratory services are likely to have seen a robust third quarter, courtesy of the company’s efforts to advance commercial measures while maintaining momentum in international markets’ catalyst install bases.

The Zacks Consensus Estimate of $527 million for CAG Diagnostics revenues suggests a 10.3% improvement from the year-ago quarter’s reported figure.

The company expects organic growth of 11-12% for 2019 CAG Diagnostic recurring revenues. We assume that this segment has started contributing to the company’s top line from the third quarter.

Other Factors

Additionally, the Water Business, of late, is gaining traction from encouraging test results in the United States and the global go-direct initiatives. The business witnessed 10% organic growth in the last reported quarter, driven by mid-single-digit growth in the United States, and considerable growth in Asia and Latin America. This trend most likely continued in the third quarter.

The consensus mark for Water business revenues stands at $35.6 million for the to-be-reported quarter, implying a 7.6% increase from the year-earlier reported number.

Strong organic revenue growth in the Livestock, Poultry and Dairy (LPD) segment is likely to show on the company’s third-quarter results, led by gains in herd health screening, poultry and pregnancy products sales.

On the flip side, increased pressure on China LPD revenues in the last reported quarter, due to the African swine fever outbreak and Brexit, is likely to have adversely impacted the company’s top line during the to-be-reported quarter.

The Zacks Consensus Estimate for third-quarter 2019 revenues is pegged at $597.4 million, indicating a 9.5% rise from the prior-year quarter’s reported figure.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for IDEXX this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But this is not the case here as you will see below.

Earnings ESP:  IDEXX has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The stock carries a Zacks Rank #3.

Stocks Worth a Look

Here are a few medical stocks worth considering from the same space with the right combination to surpass expectations this earnings season.

Alexion Pharmaceuticals, Inc (ALXN - Free Report) has an Earnings ESP of +1.22% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Vertex Pharmaceuticals (VRTX - Free Report) has an Earnings ESP of +2.24% and a Zacks Rank #1.

DENTSPLY SIRONA (XRAY - Free Report) has an Earnings ESP of +5.05% and a Zacks Rank of 3.

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