It has been about a month since the last earnings report for Qiagen (
QGEN Quick Quote QGEN - Free Report) . Shares have added about 4.3% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.
QIAGEN Q1 Earnings Lag Estimates, Operating Margin Up QIAGEN’s first-quarter 2020 adjusted earnings per share were 34 cents, up 25.9% year over year (up 25.9% at constant exchange rate or CER as well). However, the figure lagged the Zacks Consensus Estimate by a penny. The adjustment excludes the impact of certain non-recurring items like Business integration, acquisition and restructuring related expenses and amortization expenses, among others. Reported earnings per share for the quarter was 17 cents per share, up 30.8% year over year. Revenues in Detail Net sales at actual rates in the first quarter rose 6.7% on a year-over-year basis to $372.1 million (up 9% at CER). Also, the top line beat the Zacks Consensus Estimate by 14.5%. Robust sales were recorded on significant demand for solutions used in the COVID-19 pandemic. However, there were weaker customer demand trends in other areas of the portfolio. Geographical Revenue Update In the quarter under review, sales from the Americas (47% of revenues) totaled $174 million, up 2% on a reported basis (up 3% at CER). Revenues from Europe-Middle East-Africa (34% of revenues) rose 17% reportedly (up 22% at CER) to $128 million. Further, revenues from Asia-Pacific/Japan (19% of revenues) rose 1% year over year on a reported basis (up 3% at CER) to $69 million. Segmental Details As of the first quarter of 2020, QIAGEN has two major customer classes which are Molecular Diagnostics (that includes human healthcare including Precision Medicine and companion diagnostics) and Life Sciences (that includes Pharma and Academia/Applied Testing). Molecular Diagnostics (representing 47% of net sales) revenues were up 4% on a reported basis (up 7% at CER) to $176 million. Life Sciences (53% of total revenues) reported revenues of $196 million, up 9% on a reported basis (up 10% at CER). Sales derived from Applied Testing/Academia rose 13% on a reported basis (up 14% at CER) to $123 million. Pharma sales climbed 3% on a reported basis (up 4% at CER) in the first quarter to $73 million. Operational Update Adjusted gross profit in the quarter under review rose 6.7% to $258.7 million. Despite that, gross margin remained marginally unchanged at 69.51% on a 6.7% rise in adjusted cost of revenues (adjusting for acquisition-related intangible amortization) to $113.4 million. Adjusted operating income (excluding items like acquisition-related intangible amortization, restructuring and integration, asset impairment) rose 29.7% year over year to $99.9 million in the first quarter. Adjusted operating margin expanded 476 bps to 26.8%. Financial Update QIAGEN exited the first quarter of 2020 with cash and cash equivalents of $656.8 million, up from $623.6 million at the end of 2019. At the end of the first quarter of 2020, net cash flow from operating activities was $15.9 million compared with $44.7 million a year ago. Moreover, the company reported free cash outflow of $4.1 million at the end of the first quarter against free cash inflow of $21.3 million a year ago. Guidance QIAGEN currently anticipates net sales growth of at least 12% year over year at CER and adjusted earnings per share of at least 40 cents at CER for the second quarter of 2020. In the second quarter of 2020, the company expects to witness sales growth primarily on the ongoing significant demand for various products and solutions used in coronavirus pandemic testing. This is likely to more than offset lower sales in other areas of the portfolio affected by widespread quarantine and lockdown actions worldwide. QIAGEN also anticipates an adverse currency impact of about 2- 3% on net sales growth at actual rates and an adverse impact of up to about a penny on adjusted earnings per share. QIAGEN is, however, currently not in a position to quantify the actual impact of the coronavirus pandemic, even though it expects the growth momentum of the first half of 2020 to continue through the year. Accordingly, it has suspended the full-year financial guidance for now. How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
Currently, Qiagen has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile 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.
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Qiagen has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.