IDEXX Laboratories, Inc. IDXX is set to release first-quarter 2023 results on May 2 before the opening bell.
The company posted adjusted earnings per share (EPS) of $2.05 in the last reported quarter, which surpassed the Zacks Consensus Estimate by 6.77%. IDEXX Laboratories beat earnings estimates in all the trailing four quarters, the average surprise being 3.59%.
Let’s look at how things have shaped up before this announcement.
Factors at Play
The Companion Animal Group (“CAG”) business of IDEXX is expected to have gained from consistent organic growth in CAG Diagnostics’ recurring revenues, backed by growth in clinical service demand and the expanded utilization of diagnostic products and services across geographies.
The benefits of IDEXX’s key execution drivers, including the expansion of the CAG premium instrument base, sustained high customer retention levels and the expansion of diagnostics revenues per visit supported by higher price realization, are likely to have generated substantial CAG Diagnostics’ recurring revenues in the first quarter.
IDEXX Laboratories, Inc. Price and EPS Surprise
IDEXX Laboratories, Inc. price-eps-surprise | IDEXX Laboratories, Inc. Quote
In the prior quarter, consumable gains were supported by solid year-over-year growth in IDEXX’s global premium instrument installed base. This reflected double-digit gains across the Catalyst, Premium Hematology and SediVue platforms.
The company placed more than 5000 CAG premium instruments in the fourth quarter of 2022. Strong customer interests in IDEXX’s premium hematology analyzer, ProCyte One, and global expansion efforts in premium hematology placements are likely to have benefited the company’s CAG arm in the first quarter.
Revenues from veterinary software and diagnostic imaging systems, including the benefits of the ezyVet acquisition, are likely to have been advantageous for the business in the to-be-reported quarter. IDEXX’s veterinary software is also expected to report strong growth in the first quarter, supported by gains from recurring software and continued strong momentum in cloud-based software placements.
Recently, IDEXX Laboratories made a significant development. In January 2023, IDEXX added a canine cancer screening test to its advanced preventive care solutions, to help veterinary professionals in the early detection of life-threatening diseases and improve patient outcomes. We expect that this development is likely to have aided the company’s top line in the first quarter.
In February, IDXX announced a first-of-its-kind empirical study featuring 786 participants, aimed to discover effective actions veterinary practices can take to increase productivity. The publication titled “Finding the Time: Empowering Veterinary Teams to Get the Most Out of Every Day” provided strategies for creating additional capacity amid staffing constraints, depending on where a practice falls on IDEXX’s Practice Productivity Index.
The Zacks Consensus Estimate for CAG revenues is pegged at $804 million, suggesting an improvement of 7.3% from the year-ago quarter’s reported figure.
Meanwhile, IDEXX’s Water business is likely to have delivered an impressive revenue performance on price improvements and solid volume gains for compliance and non-compliance testing. The business is expected to have benefited from a continued increase in water testing demand worldwide as economies gradually recover from the severity of the pandemic.
The Zacks Consensus Estimate for Water revenues is pegged at $38.9 million, suggesting a fall of 0.8% from the year-ago quarter’s reported figure.
Within the Livestock, Poultry and Dairy (“LPD”) arm, we expect first-quarter revenues to have been positively impacted by increasing herd health screening and improved performance in China compared to the normalized levels of African Swine Fever and core Swine testing.
The Zacks Consensus Estimate for LPD revenues is pegged at $31.0 million, implying a drop of 6.9% from the year-ago quarter’s reported figure.
The Zacks Consensus Estimate for IDEXX Laboratories’ first-quarter 2023 revenues is pegged at $888 million, suggesting an increase of 6.2% from the year-ago reported figure.
The consensus estimate for its first-quarter 2023 EPS of $2.39 indicates a 5.3% rise from the year-ago reported figure.
What Our Model Suggests
Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, has a higher chance of beating estimates. However, that is not the case here, as you can see below:
Earnings ESP: IDEXX Laboratories has an Earnings ESP of -2.04%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #2.
Stocks Worth a Look
Here are some medical stocks worth considering, as these have the right combination of elements to post an earnings beat this quarter.
Align Technology ALGN has an Earnings ESP of +2.38% and a Zacks Rank #2. The company will release first-quarter 2023 results on Apr 26. You can see the complete list of today’s Zacks #1 Rank stocks here.
Align Technology has an expected long-term earnings growth rate of 16%. ALGN has an earnings yield of 2.23% compared with the industry’s 4.61%.
Henry Schein HSIC has an Earnings ESP of +0.99% and a Zacks Rank #2. Henry Schein is expected to release first-quarter 2023 results on May 2.
HSIC has an expected long-term earnings growth rate of 8.10%. The company’s earnings yield of 6.41% compares favorably with the industry’s 4.61%.
BioRad Laboratories BIO currently has an Earnings ESP of +0.16% and a Zacks Rank #2. BioRad is scheduled to release first-quarter 2023 results on May 4.
BioRad has an expected earnings growth rate of 12.76% for the next year. BIO has an earnings yield of 3.27% compared with the industry’s -3.07%.
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