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Bio-Rad Gains on New Product Portfolio Despite Currency Woes

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On Dec 27, 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).

Shares of this California-based manufacturer and global supplier of clinical diagnostics and life science research products have outperformed 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 also 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 QXDxAutoDGddPCR System, which uses its Droplet Digital PCR technology and the QXDx BCR-ABL %IS Kit.

Further, we are optimistic about the company’s active portfolio expansion for the blood typing market. New product adoption in the United States has been praiseworthy 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 the company, 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.

Stocks Worth a Look

A few better-ranked stocks from the broader medical space are Haemonetics Corporation (HAE - Free Report) , NuVasive, Inc (NUVA - Free Report) and Omnicell (OMCL - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy)  stocks here.

Haemonetics has a projected long-term earnings growth rate of 13.5%.

NuVasive has an expected long-term earnings growth rate of 10.9%.

Omnicell has a long-term earnings growth rate of 12.5%.

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