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Here's Why You Should Invest in Bio-Rad (BIO) Stock Now
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Bio-Rad Laboratories, Inc. (BIO - Free Report) has been gaining from solid recovery in most of its key global markets as well as an uptick in demand for COVID-related products due to the spread of the new Omicron variant. The company’s focus on the international market is encouraging. However, escalating expenses and foreign exchange headwinds do not bode well.
Over the past year, shares of this Zacks Rank #2 (Buy) company have gained 5.1% compared with the 12.6% fall of the industry it belongs to and 13.4% surge of the S&P 500 composite.
The renowned manufacturer and global supplier of clinical diagnostics and life science research products has a market capitalization of $17.60 billion.
Over the past five years, the company registered earnings growth of 31.2%, way ahead of the industry’s 7.8% rise and the S&P 500’s 2.8% increase. The company’s earnings have surpassed estimates in the trailing four quarters, the average surprise being 66.97%.
Let’s delve deeper.
Key Drivers
Clinical Diagnostics Continues to Gain Momentum: Bio-Rad’s fourth-quarter 2021 clinical diagnostics sales were primarily driven by a recovery of routine testing. During the fourth quarter, the Diagnostics Group recorded growth across its product lines. The year-over-year growth was driven by a recovery of routine testing, which is now generally approaching pre-COVID levels. In June 2021, Bio-Rad recently teamed up with Seegene -- a global provider of multiplex molecular diagnostics. The partnership with Seegene is intended to provide required diagnostic testing products to the U.S. markets.
Image Source: Zacks Investment Research
Focus on International Markets: In recent times, Bio-Rad has been deriving more than 60% of its net sales from international markets. Europe happens to be the largest international market for the company. On a geographic basis, the Diagnostics group’s currency-neutral year-over-year sales grew mid-single digits in the Americas and saw double-digit growth in Europe and Asia. The Life Science business witnessed growth in all regions compared with the year-ago quarter. The company also noted the continued gradual capacity improvement at academic and diagnostic labs.
Segmental Growth: Excluding COVID-related sales and the $32-million settlement for back royalties, Bio-Rad witnessed the underlying Life Science business’s year-over-year currency-neutral core revenue growth of 7.9% in the fourth quarter of 2021. The year-over-year growth was driven by Droplet Digital PCR as well as the qPCR business, which is experiencing strong uptake from Bio-Rad’s new-generation CFX Opus platform. Further, Bio-Rad witnessed constant-currency sales growth of 12.6% and reported growth of 12.8% at its Clinical diagnostics segment in the reported quarter.
Downsides
Exposure to Foreign Currency: Bio-Rad derives more than 50% of its revenues from the international market, which exposes it to the effects of fluctuations in foreign currency. In the past several years, the company’s earnings were significantly affected by foreign exchange.
Escalating Expenses: During the fourth quarter, Bio-Rad’s gross profit fell 12.9% year over year. Per the company, adjusted gross margin was 55.4%, contracting 280 basis points. Operating expenses in the reported quarter rose 3.2% year over year. The year-over-year rise in operating costs is building pressure on the bottom line.
Estimate Trends
The Zacks Consensus Estimate for Bio-Rad’s 2023 earnings is pegged at $15.55, suggesting 12.7% growth from the year-ago reported number.
The Zacks Consensus Estimate for its 2023 revenues is pinned at $3.09 billion, suggesting 7% growth from the year-ago reported number.
Other Key Picks
A few other top-ranked stocks in the broader medical space are McKesson Corporation (MCK - Free Report) , AMN Healthcare Services, Inc. (AMN - Free Report) and Henry Schein, Inc. (HSIC - Free Report) .
McKesson has a long-term earnings growth rate of 11.8%. MCK has gained 60% compared with the industry’s 12.2% growth in the past year.
AMN Healthcare, carrying a Zacks Rank #1, has a long-term earnings growth rate of 16.2%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 19.5%, on average.
AMN Healthcare has outperformed its industry over the past year. AMN has gained 39.3% versus the 54.9% industry decline.
Henry Schein has an estimated long-term growth rate of 11.8%. Henry Schein’s earnings surpassed estimates in the trailing four quarters, the average surprise being 21.86%. It currently carries a Zacks Rank #1.
Henry Schein has gained 34.2% compared with the industry’s 12.2% rise over the past year.
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Here's Why You Should Invest in Bio-Rad (BIO) Stock Now
Bio-Rad Laboratories, Inc. (BIO - Free Report) has been gaining from solid recovery in most of its key global markets as well as an uptick in demand for COVID-related products due to the spread of the new Omicron variant. The company’s focus on the international market is encouraging. However, escalating expenses and foreign exchange headwinds do not bode well.
Over the past year, shares of this Zacks Rank #2 (Buy) company have gained 5.1% compared with the 12.6% fall of the industry it belongs to and 13.4% surge of the S&P 500 composite.
The renowned manufacturer and global supplier of clinical diagnostics and life science research products has a market capitalization of $17.60 billion.
Over the past five years, the company registered earnings growth of 31.2%, way ahead of the industry’s 7.8% rise and the S&P 500’s 2.8% increase. The company’s earnings have surpassed estimates in the trailing four quarters, the average surprise being 66.97%.
Let’s delve deeper.
Key Drivers
Clinical Diagnostics Continues to Gain Momentum: Bio-Rad’s fourth-quarter 2021 clinical diagnostics sales were primarily driven by a recovery of routine testing. During the fourth quarter, the Diagnostics Group recorded growth across its product lines. The year-over-year growth was driven by a recovery of routine testing, which is now generally approaching pre-COVID levels. In June 2021, Bio-Rad recently teamed up with Seegene -- a global provider of multiplex molecular diagnostics. The partnership with Seegene is intended to provide required diagnostic testing products to the U.S. markets.
Focus on International Markets: In recent times, Bio-Rad has been deriving more than 60% of its net sales from international markets. Europe happens to be the largest international market for the company. On a geographic basis, the Diagnostics group’s currency-neutral year-over-year sales grew mid-single digits in the Americas and saw double-digit growth in Europe and Asia. The Life Science business witnessed growth in all regions compared with the year-ago quarter. The company also noted the continued gradual capacity improvement at academic and diagnostic labs.
Segmental Growth: Excluding COVID-related sales and the $32-million settlement for back royalties, Bio-Rad witnessed the underlying Life Science business’s year-over-year currency-neutral core revenue growth of 7.9% in the fourth quarter of 2021. The year-over-year growth was driven by Droplet Digital PCR as well as the qPCR business, which is experiencing strong uptake from Bio-Rad’s new-generation CFX Opus platform. Further, Bio-Rad witnessed constant-currency sales growth of 12.6% and reported growth of 12.8% at its Clinical diagnostics segment in the reported quarter.
Downsides
Exposure to Foreign Currency: Bio-Rad derives more than 50% of its revenues from the international market, which exposes it to the effects of fluctuations in foreign currency. In the past several years, the company’s earnings were significantly affected by foreign exchange.
Escalating Expenses: During the fourth quarter, Bio-Rad’s gross profit fell 12.9% year over year. Per the company, adjusted gross margin was 55.4%, contracting 280 basis points. Operating expenses in the reported quarter rose 3.2% year over year. The year-over-year rise in operating costs is building pressure on the bottom line.
Estimate Trends
The Zacks Consensus Estimate for Bio-Rad’s 2023 earnings is pegged at $15.55, suggesting 12.7% growth from the year-ago reported number.
The Zacks Consensus Estimate for its 2023 revenues is pinned at $3.09 billion, suggesting 7% growth from the year-ago reported number.
Other Key Picks
A few other top-ranked stocks in the broader medical space are McKesson Corporation (MCK - Free Report) , AMN Healthcare Services, Inc. (AMN - Free Report) and Henry Schein, Inc. (HSIC - Free Report) .
McKesson, carrying a Zacks Rank #2, reported third-quarter fiscal 2022 adjusted earnings per share (EPS) of $6.15, which beat the Zacks Consensus Estimate of $5.38 by 14.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
McKesson has a long-term earnings growth rate of 11.8%. MCK has gained 60% compared with the industry’s 12.2% growth in the past year.
AMN Healthcare, carrying a Zacks Rank #1, has a long-term earnings growth rate of 16.2%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 19.5%, on average.
AMN Healthcare has outperformed its industry over the past year. AMN has gained 39.3% versus the 54.9% industry decline.
Henry Schein has an estimated long-term growth rate of 11.8%. Henry Schein’s earnings surpassed estimates in the trailing four quarters, the average surprise being 21.86%. It currently carries a Zacks Rank #1.
Henry Schein has gained 34.2% compared with the industry’s 12.2% rise over the past year.