On Nov 25, we issued an updated research report on Bio-Rad Laboratories, Inc. (BIO - Free Report) . The company’s traction from solid prospects in the blood typing market makes us upbeat while declining gross margin is a concern. The stock carries a Zacks Rank #3 (Hold).
This California-based manufacturer and global supplier of clinical diagnostics and life science research products has been outperforming its industry over the past three months. The stock has rallied 23.5% compared with the industry’s 9.7% rise.
Bio-Rad exited the third quarter of 2019 with better-than-expected earnings and in-line revenues. Strong revenue growth in Life Sciences and Clinical Diagnostics segments was encouraging.
Improvement in the Life Sciences segment was primarily driven by solid growth in Droplet Digital PCR and Food Safety products across all three geographies (the Americas, Asia and Europe). Impressive uptick in the Clinical Diagnostics segment’s revenues was attributable to progress in Quality Controls, Immunology and Blood Typing product lines in the Americas and Asia. However, this uptrend was hampered by a tough macroeconomic environment in Europe.
Excluding process media, robust currency-neutral revenue growth within the Life Sciences segment buoys optimism. We are also hopeful about the company’s consistent benefit from the earlier-received FDA approval of its QXDx AutoDG ddPCR System, which uses Bio-Rad’s Droplet Digital PCR technology and the QXDx BCR-ABL %IS Kit.
Further, we are encouraged by the company’s active portfolio expansion for the blood typing market. New product adoption in the United States has been impressive with the recent 510(k) clearance of the IH-Reader 24, a semi-automated blood typing instrument designed for medium- to small-volume laboratories. With the FDA nod to the IH500 in April 2019, growth within this segment will likely improve further. Per Bio-Rad, the medium volume market was the largest within the United States and IH500 is particularly well-suited for that.
Meanwhile, soft revenues at the Clinical Diagnostics segment in Europe are worrisome. Constant foreign-exchange woes and operation in a highly competitive market are other downsides.
Further, Bio-Rad is exposed to risks associated with a weaker global economy and lower reimbursement rates.
Some better-ranked stocks from the broader medical space are Haemonetics Corporation (HAE - Free Report) , National Vision Holdings, Inc (EYE - Free Report) and ResMed Inc (RMD - Free Report) .
Haemonetics has a Zacks Rank #1 (Strong Buy) and a projected long-term earnings growth rate of 13.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.
National Vision’s long-term earnings growth rate is estimated at 17.8%. The company currently has a Zacks Rank #2 (Buy).
ResMed’s long-term earnings growth rate is anticipated at 12.9%. It currently carries a Zacks Rank of 2.
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