Yahoo Finance QIAGEN (QGEN) Gains From Innovation, Currency Headwind Ails
QIAGEN’s QGEN business is getting a strong boost from the growing demand for molecular diagnostic products, international expansion, expanded test menu and growth-driving strategic collaborations. Yet, strong reliance on relationships with collaborative partners and foreign exchange headwinds are the major downsides. The stock carries a Zacks Rank #3 (Hold).
In the past six months, QIAGEN has outperformed the industry it belongs to. The stock has gained 7.6% against the industry’s 3.4% fall.
QIAGEN ended third-quarter 2022 with better-than-expected earnings and revenues. Ongoing double-digit sales growth in the non-COVID product portfolio, a high level of profitability and strong cash flow are the major upsides. The company continues to see broad-based demand for QIAGEN’s solutions in molecular research and clinical testing markets globally. The raised full-year 2022 guidance for net sales and EPS indicates this growth momentum to continue.
Molecular diagnostic solutions contributed about 30% to sales in the third quarter of 2022. The key driver behind the growth was QuantiFERON franchise. Sales for the QuantiFERON TB test rose 14% CER in the third quarter on double-digit gains in all regions.
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In terms of QIAstat-Dx, the company is witnessing increasing demand and new customer interest following the new CE-IVD meningitis panel launch in 2022. The addition of this panel established a strategic critical mass in terms of the menu necessary for adoption by many customers in this region.
During the third quarter, the company released a new workflow leveraging the new easy-to-connect instrument with the QIAcuity digital PCR instruments for liquid biopsy applications. This workflow combines the key features of the very high-quality sample prep with an easy tool and QIAcuity's high sensitivity to handle the demands of high-volume liquid biopsy samples.
In terms of placement, the company also continues to see robust demand around the world, especially given the ability of labs to use NeuMoDx to automate the processing of LDT's laboratory developments. In the PCR and Nucleic acid amplification group, the new biopharma assets for QIAcuity are well received in the market. QIAcuity systems are increasingly adopted to enhance drug safety and efficacy to leverage the higher level of sensitivity and accuracy offered by digital PCR technology.
On the flip side, In the third quarter of 2022, on a year-over-year basis, QIAGEN’s earnings and sales both declined. The company witnessed a significant decline in COVID-19 testing demand, which led to an overall decline of about 2% at constant exchange rates over the year-ago period. The massive decline in COVID-19 product sales and severe foreign exchange headwind impacted overall performance. In the PCR Nucleic acid amplification product group, sales declined 5% CER in the reported quarter.
Total debt at the end of the third quarter was much higher than the quarter-end cash and cash equivalent and short-term investments level, indicating a weak solvency position. A series of current macroeconomic issues, including supply chain disruptions, energy needs and rising inflation, continue to hamper the company’s performance. Apart from this, stiff competition from firms offering pre-analytical solutions and other products used by QIAGEN’s customers persists. High exposure to risks of foreign currency movement is observed as well.
QIAGEN currently markets products in more than 100 countries. In the quarter under review, revenues from Europe, the Middle East and Africa (31% of sales) fell 11%, reportedly due to the sharp decline in COVID testing trends. Revenues from Asia-Pacific/ Japan (19% of sales) fell 17% year over year on a reported basis. Sales in China declined about 3% CER in the third quarter.
Key Picks
Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. AMN, Boston Scientific Corporation BSX and Merit Medical Systems, Inc. MMSI.
AMN Healthcare, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 10.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AMN Healthcare has lost 10.6% compared with the industry’s 30.3% decline in the past year.
Boston Scientific, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.3%. BSX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average beat being 1.9%.
Boston Scientific has gained 6.8% against the industry’s 42.6% decline in the past year.
Merit Medical, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average beat being 25.4%.
Merit Medical has gained 13.7% against the industry’s 8.7% decline in the past year.
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