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Here's Why You Should Invest in IDEXX (IDXX) Stock Right Now
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IDEXX Laboratories, Inc. (IDXX - Free Report) is likely to grow in the coming quarters, backed by the strong performance of the CAG (Companion Animal Group) Diagnostics business. A key element of IDEXX’s customer engagement strategy is the expansion of its commercial footprint in a disciplined approach. Huge demand for the company’s cloud-based products is also encouraging.
However, IDEXX’s operations are exposed to macroeconomic challenges, which may impact its results of operations. Also, its debt profile remains concerning.
In the past year, this Zacks Rank #3 (Hold) stock has increased 34.6% compared with the 4.3% rise of the industry and a 24.1% increase of the S&P 500 composite.
The renowned medical device company has a market capitalization of $35.1 billion. IDEXX has an estimated long-term earnings growth rate of 18% compared with the industry’s 13.3%. IDXX’s earnings surpassed estimates in all the trailing four quarters, delivering an average surprise of 7.64%.
Let’s delve deeper.
Upsides
Consistent Strong Performance of the CAG Segment: The company’s long-term success in the continuing growth of CAG’s recurring diagnostic products and services depends on growing volumes at existing customers by increasing their utilization of existing and new test offerings, acquiring new customers, maintaining high customer loyalty and retention and realizing modest annual price increases.
In the third quarter of 2023, IDEXX's CAG Diagnostics recurring revenues increased 9% organically, which remained solidly above sector growth levels. The results were supported by the sustained benefits of execution drivers. In the United States, volume growth was supported by new business gains, high customer retention levels and continued increases in diagnostic frequency and utilization per clinical visit at the practice level.
Image Source: Zacks Investment Research
Robust Global Performance: The company’s increased commercial presence as a result of seven international commercial expansions since 2020 helped drive solid double-digit year-over-year gains in the international premium instrument installed base across platforms in the third quarter of 2023.
Globally, IDEXX continues to achieve strong organic revenue growth across its modalities. In addition, IDEXX’s premium instrument placements continue to benefit from the international launch of ProCyte One.
In the third quarter, the company placed 4,571 CAG premium instruments, while ProCyte One surpassed an installed base of more than 12,000 units. The quality of instrument replacements continues to be excellent, as demonstrated by solid global gains in EVI (economic value index) metrics and sustained high, new and competitive catalyst placements in the United States.
Cloud-Based Software in Trend: The huge demand for medical services that clients see motivates IDEXX to develop its software solutions. Both individual and corporate customers, in particular, are attracted to these solutions as they become more concerned with leveraging software to standardize their processes at scale. IDEXX’s cloud-based products, including ezyVet and NEO PIMS and Web PACS's imaging software, continue to be in high demand as a response to this trend.
Another notable software offering includes an integrated diagnostics portal — VetConnect PLUS with IDEXX DecisionIQ. The company’s software innovation is deeply integrated with its approaches to diagnostics innovations, as evidenced by its highly successful instrument platform strategy, enabled by cloud-based capabilities and connectivity that enhance practice insight and workflow.
Downsides
Macroeconomic Headwinds Put Pressure on the Bottom Line: In the third quarter, IDXX’s operating expenses suffered an increase, primarily due to higher personnel-related costs and outside services costs. Headwinds from ongoing capacity management challenges at U.S. clinics impacted software trends and caused a relative slowdown in wellness visits in the quarter. The potential macro impacts of these trends led the company to lower its revenue guidance for the fiscal year by $20 million.
Debt Profile: At the end of the third quarter of 2023, IDEXX reported a short-term debt of $400 million and corresponding cash and cash equivalents of $331.7 million. With unfavorable solvency, the company is likely to face a challenge in repaying its obligations. Total debt (including the current portion) was $768.8 million, sequentially down from $771.8 million at the end of the second quarter.
Estimate Trend
The Zacks Consensus Estimate for IDEXX’s 2023 earnings per share (EPS) has remained constant at from $9.83 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $3.64 billion. This suggests an 8.1% rise from the year-ago reported number.
Haemonetics has an estimated earnings growth rate of 27.1% for fiscal 2024 compared with the industry’s 17.2%. HAE’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 19.39%. Its shares have rallied 11.9% against the industry’s 1.4% fall in the past year.
Insulet, sporting a Zacks Rank #1 at present, has a long-term estimated earnings growth rate of 41.5% compared with the industry’s 12.2%. Shares of the company have decreased 29.7% compared with the industry’s 1.4% decline over the past year.
PODD’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 126.9%. In the last reported quarter, it delivered an average earnings surprise of 58.3%.
DexCom, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 33.6% compared with the industry’s 14.3%. Shares of DXCM have risen 9.3% compared with the industry’s 4.3% growth over the past year.
DXCM’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.4%. In the last reported quarter, it delivered an average earnings surprise of 47.1%.
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Here's Why You Should Invest in IDEXX (IDXX) Stock Right Now
IDEXX Laboratories, Inc. (IDXX - Free Report) is likely to grow in the coming quarters, backed by the strong performance of the CAG (Companion Animal Group) Diagnostics business. A key element of IDEXX’s customer engagement strategy is the expansion of its commercial footprint in a disciplined approach. Huge demand for the company’s cloud-based products is also encouraging.
However, IDEXX’s operations are exposed to macroeconomic challenges, which may impact its results of operations. Also, its debt profile remains concerning.
In the past year, this Zacks Rank #3 (Hold) stock has increased 34.6% compared with the 4.3% rise of the industry and a 24.1% increase of the S&P 500 composite.
The renowned medical device company has a market capitalization of $35.1 billion. IDEXX has an estimated long-term earnings growth rate of 18% compared with the industry’s 13.3%. IDXX’s earnings surpassed estimates in all the trailing four quarters, delivering an average surprise of 7.64%.
Let’s delve deeper.
Upsides
Consistent Strong Performance of the CAG Segment: The company’s long-term success in the continuing growth of CAG’s recurring diagnostic products and services depends on growing volumes at existing customers by increasing their utilization of existing and new test offerings, acquiring new customers, maintaining high customer loyalty and retention and realizing modest annual price increases.
In the third quarter of 2023, IDEXX's CAG Diagnostics recurring revenues increased 9% organically, which remained solidly above sector growth levels. The results were supported by the sustained benefits of execution drivers. In the United States, volume growth was supported by new business gains, high customer retention levels and continued increases in diagnostic frequency and utilization per clinical visit at the practice level.
Image Source: Zacks Investment Research
Robust Global Performance: The company’s increased commercial presence as a result of seven international commercial expansions since 2020 helped drive solid double-digit year-over-year gains in the international premium instrument installed base across platforms in the third quarter of 2023.
Globally, IDEXX continues to achieve strong organic revenue growth across its modalities. In addition, IDEXX’s premium instrument placements continue to benefit from the international launch of ProCyte One.
In the third quarter, the company placed 4,571 CAG premium instruments, while ProCyte One surpassed an installed base of more than 12,000 units. The quality of instrument replacements continues to be excellent, as demonstrated by solid global gains in EVI (economic value index) metrics and sustained high, new and competitive catalyst placements in the United States.
Cloud-Based Software in Trend: The huge demand for medical services that clients see motivates IDEXX to develop its software solutions. Both individual and corporate customers, in particular, are attracted to these solutions as they become more concerned with leveraging software to standardize their processes at scale. IDEXX’s cloud-based products, including ezyVet and NEO PIMS and Web PACS's imaging software, continue to be in high demand as a response to this trend.
Another notable software offering includes an integrated diagnostics portal — VetConnect PLUS with IDEXX DecisionIQ. The company’s software innovation is deeply integrated with its approaches to diagnostics innovations, as evidenced by its highly successful instrument platform strategy, enabled by cloud-based capabilities and connectivity that enhance practice insight and workflow.
Downsides
Macroeconomic Headwinds Put Pressure on the Bottom Line: In the third quarter, IDXX’s operating expenses suffered an increase, primarily due to higher personnel-related costs and outside services costs. Headwinds from ongoing capacity management challenges at U.S. clinics impacted software trends and caused a relative slowdown in wellness visits in the quarter. The potential macro impacts of these trends led the company to lower its revenue guidance for the fiscal year by $20 million.
Debt Profile: At the end of the third quarter of 2023, IDEXX reported a short-term debt of $400 million and corresponding cash and cash equivalents of $331.7 million. With unfavorable solvency, the company is likely to face a challenge in repaying its obligations. Total debt (including the current portion) was $768.8 million, sequentially down from $771.8 million at the end of the second quarter.
Estimate Trend
The Zacks Consensus Estimate for IDEXX’s 2023 earnings per share (EPS) has remained constant at from $9.83 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $3.64 billion. This suggests an 8.1% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Haemonetics (HAE - Free Report) , Insulet (PODD - Free Report) and DexCom (DXCM - Free Report) .
Haemonetics has an estimated earnings growth rate of 27.1% for fiscal 2024 compared with the industry’s 17.2%. HAE’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 19.39%. Its shares have rallied 11.9% against the industry’s 1.4% fall in the past year.
HAE carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Insulet, sporting a Zacks Rank #1 at present, has a long-term estimated earnings growth rate of 41.5% compared with the industry’s 12.2%. Shares of the company have decreased 29.7% compared with the industry’s 1.4% decline over the past year.
PODD’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 126.9%. In the last reported quarter, it delivered an average earnings surprise of 58.3%.
DexCom, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 33.6% compared with the industry’s 14.3%. Shares of DXCM have risen 9.3% compared with the industry’s 4.3% growth over the past year.
DXCM’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.4%. In the last reported quarter, it delivered an average earnings surprise of 47.1%.