Yahoo Finance Here's Why You Should Invest in IDEXX (IDXX) Stock Right Now
IDEXX Laboratories, Inc. IDXX has been gaining from the ongoing strength in the company’s Companion Animal Group (CAG) business. The company’s strong growth globally buoys optimism. However, foreign exchange headwinds and escalating expenses do not bode well.
In the past year, shares of this Zacks Rank #2 (Buy) company have lost 8.2% compared with the industry’s 15% fall. The S&P 500 fell 7.5% during the same period.
The renowned medical device company has a market capitalization of $39.20 billion. The long-term expected growth rate is estimated at 18%, compared with the industry’s growth expectation of 15.9%.
Let’s delve deeper.
Q4 Upsides: IDEXX exited the fourth quarter of 2022 on a decent note, with earnings and revenues beating estimates. The company registered year-over-year growth in revenues on a reported and organic basis. The top line was driven by continued benefits from the expansion of IDEXX's global premium instrument installed base. CAG Diagnostics’ organic recurring revenue growth reflects solid gains across IDEXX's major modalities globally, supported by growth in clinical service demand and expanded utilization of diagnostic products and services.
Strong Global Performance: IDEXX continues to demonstrate solid growth globally. International revenues in primarily aided by a gain in CAG and Water businesses.CAG premium instrument placements increased 13% in the fourth quarter, reflecting double-digit gains across the catalyst, premium hematology and SediVue platforms. The company placed 5,065 premium instruments in the fourth quarter. The quality of placements continues to be excellent, reflected in 3% global gains in new and competitive Catalyst placements, including 7% gains in the U.S. The company also witnessed a 5% growth in new and competitive premium hematology placements globally, leveraging strong customer interest in ProCyte One.
Global Lab revenues increased 8% organically, reflecting high single-digit gains in the United States led by improved organic growth in international regions.
CAG Continues to Perform Well: IDEXX derives the lion’s share of its revenues from the CAG segment. The company registered stellar third-quarter revenue growth within CAG.
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IDEXX's U.S. CAG Diagnostic recurring revenue growth of 9% in the fourth quarter continues to outpace sector growth trends. IDEXX' U.S. performance was supported by a 1,200 basis point growth benefit from IDEXX execution drivers, including approximately 7% net price gains and continued solid growth contributions from customer additions and leverage of IDEXX innovation.
CAG Diagnostic’s recurring revenues were supported by relatively higher levels of net price realization, including benefits from the second-half price initiatives. IDEXX estimates net price changes contributed around 7% to worldwide CAG Diagnostic recurring revenue growth in the fourth quarter, reflecting product and service enhancements and coverage of inflationary impacts.
Downsides
Foreign Exchange Headwind: The majority of IDEXX’s consolidated revenues are derived from the sale of products in international markets. Thus, strengthening of the exchange rate for the U.S. dollar relative to other currencies dented the company’s revenues generated in currencies other than the U.S. dollar and on profits from products manufactured in the United States and sold internationally.
Weak Solvency and Capital Structure: IDEXX exited 2022 with cash and cash equivalents of $112.5 million compared with $144.5 million recorded at the end of 2021. Total debt (including the current portion) at the end of 2022 was $769.4 million compared with a total debt of $850.2 million at the end of 2021. However, if we consider the current debt at the end of the quarter, it was less than the quarter-end cash balance.
Estimate Trends
IDEXX has been witnessing an upward estimate revision trend for 2023. For the past 90 days, the Zacks Consensus Estimate for IDEXX’s 2023 earnings has moved 1.8% north to $9.57.
The Zacks Consensus Estimate for 2023 revenues is pegged at $3.63 billion, suggesting 7.9% growth from the year-ago quarter’s reported number.
Key Picks
Some other top-ranked stocks in the broader medical space are Hologic, Inc. HOLX, Henry Schein, Inc. HSIC and Avanos Medical, Inc. AVNS.
Hologic, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 15.2%. HOLX’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 30.6%.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Hologic has gained 1.7% against the industry’s 17.5% growth in the past year.
Henry Schein, carrying a Zacks Rank #1 at present, has an estimated long-term growth rate of 8.1%. HSIC’s earnings surpassed estimates in three of the trailing four quarters and matched the same in the other, the average beat being 2.9%.
Henry Schein has lost 12.4% compared with the industry’s 10.9% decline in the past year.
Avanos, carrying a Zacks Rank #2 at present, has an estimated growth rate of 1.8% for 2023. AVNS’ earnings surpassed estimates in all the trailing four quarters, the average beat being 11%.
Avanos has lost 13.7% compared with the industry’s 17.5% decline in the past year.
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Hologic, Inc. (HOLX) : Free Stock Analysis Report
Henry Schein, Inc. (HSIC) : Free Stock Analysis Report
IDEXX Laboratories, Inc. (IDXX) : Free Stock Analysis Report
AVANOS MEDICAL, INC. (AVNS) : Free Stock Analysis Report
