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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 sustained success of CAG’s recurring diagnostic products and services. A key element of IDEXX’s customer engagement strategy is the expansion of its commercial footprint in a disciplined approach. Robust demand for the company’s cloud-based offerings buoys optimism.
However, negative solvency and foreign exchange fluctuations are discouraging for the company’s operations.
In the past year, this Zacks Rank #3 (Hold) stock has increased 7.9% compared with the 0.8% rise of the industry and 20.2% growth of the S&P 500 composite.
The renowned medical device company has a market capitalization of $44.2 billion. IDEXX has an estimated long-term earnings growth rate of 18% compared with the industry’s 13.4%. IDXX’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.64%.
Let’s delve deeper.
Upsides
Strong 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. This includes a record number of instrument placements in the Asia-Pacific region, which helped drive 13% growth in the international installed base.
Image Source: Zacks Investment Research
In the third quarter, IDEXX’s consumable gains are aided by solid growth in the global premium instrument installed base, reflecting robust gains across its Catalyst, Premium Hematology and SediVue platforms. 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.
CAG Continues to Perform Well: IDXX’s long-term success in the continuing growth of CAG recurring diagnostic products and services depends upon 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. IDEXX continuously seeks opportunities to enhance the care that veterinary professionals give to their patients and clients by supporting the implementation of real-time care testing workflows, which perform tests and share test results with the client during the patient visit.
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.
Cloud-Based Software in Trend: The huge demand for medical services that clients see is what 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. Given the high demand for pet healthcare services, occupied clinics continue to recognize the value of cloud-based products because they enable them to spend more time concentrating on the patients who walk through the door rather than on time-consuming back-office tasks.
IDEXX 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. 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
Foreign Exchange Headwind: The majority of IDEXX’s consolidated revenues are derived from the sale of products in international markets. Thus, the strengthening of the rate of exchange for the U.S. dollar relative to other currencies had a negative impact on the company’s revenues derived in currencies other than the U.S. dollar and on profits from products manufactured in the United States and sold internationally. In the third quarter of 2023, the impact of foreign currency movements decreased IDEXX’s gross profit margin by approximately 60 basis points.
Debt Profile: At the end of the third quarter of 2023, IDEXX reported a short-term debt of $400 million against the corresponding cash and cash equivalents of $331.7 million. With unfavorable solvency, the company is likely to face a challenge in repaying its obligations.
Estimate Trend
The Zacks Consensus Estimate for IDEXX’s 2023 earnings per share (EPS) has moved up from $9.85 to $9.87 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $3.65 billion. This suggests an 8.4% rise from the year-ago reported number.
Haemonetics has an estimated earnings growth rate of 28.4% for fiscal 2024 compared with the industry’s 16.8%. HAE’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 16.1%. Its shares have fallen 5.1% against the industry’s 0.7% rise in the past year.
Insulet, sporting a Zacks Rank #1 at present, has a long-term estimated earnings growth rate of 35.7% compared with the industry’s 12.2%. Shares of the company have decreased 33.9% against the industry’s 0.7% rise over the past year.
PODD’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 105.1%. In the last reported quarter, it delivered an average earnings surprise of 77.5%.
DaVita, sporting a Zacks Rank #1 at present, has an estimated long-term earnings growth rate of 17.3% compared with the industry’s 11.5%. Shares of DVA have rallied 26.7% compared with the industry’s 4.4% rise over the past year.
DVA’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.6%. In the last reported quarter, it delivered an average earnings surprise of 48.4%.
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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 sustained success of CAG’s recurring diagnostic products and services. A key element of IDEXX’s customer engagement strategy is the expansion of its commercial footprint in a disciplined approach. Robust demand for the company’s cloud-based offerings buoys optimism.
However, negative solvency and foreign exchange fluctuations are discouraging for the company’s operations.
In the past year, this Zacks Rank #3 (Hold) stock has increased 7.9% compared with the 0.8% rise of the industry and 20.2% growth of the S&P 500 composite.
The renowned medical device company has a market capitalization of $44.2 billion. IDEXX has an estimated long-term earnings growth rate of 18% compared with the industry’s 13.4%. IDXX’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.64%.
Let’s delve deeper.
Upsides
Strong 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. This includes a record number of instrument placements in the Asia-Pacific region, which helped drive 13% growth in the international installed base.
Image Source: Zacks Investment Research
In the third quarter, IDEXX’s consumable gains are aided by solid growth in the global premium instrument installed base, reflecting robust gains across its Catalyst, Premium Hematology and SediVue platforms. 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.
CAG Continues to Perform Well: IDXX’s long-term success in the continuing growth of CAG recurring diagnostic products and services depends upon 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. IDEXX continuously seeks opportunities to enhance the care that veterinary professionals give to their patients and clients by supporting the implementation of real-time care testing workflows, which perform tests and share test results with the client during the patient visit.
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.
Cloud-Based Software in Trend: The huge demand for medical services that clients see is what 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. Given the high demand for pet healthcare services, occupied clinics continue to recognize the value of cloud-based products because they enable them to spend more time concentrating on the patients who walk through the door rather than on time-consuming back-office tasks.
IDEXX 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. 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
Foreign Exchange Headwind: The majority of IDEXX’s consolidated revenues are derived from the sale of products in international markets. Thus, the strengthening of the rate of exchange for the U.S. dollar relative to other currencies had a negative impact on the company’s revenues derived in currencies other than the U.S. dollar and on profits from products manufactured in the United States and sold internationally. In the third quarter of 2023, the impact of foreign currency movements decreased IDEXX’s gross profit margin by approximately 60 basis points.
Debt Profile: At the end of the third quarter of 2023, IDEXX reported a short-term debt of $400 million against the corresponding cash and cash equivalents of $331.7 million. With unfavorable solvency, the company is likely to face a challenge in repaying its obligations.
Estimate Trend
The Zacks Consensus Estimate for IDEXX’s 2023 earnings per share (EPS) has moved up from $9.85 to $9.87 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $3.65 billion. This suggests an 8.4% 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 DaVita (DVA - Free Report) .
Haemonetics has an estimated earnings growth rate of 28.4% for fiscal 2024 compared with the industry’s 16.8%. HAE’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 16.1%. Its shares have fallen 5.1% against the industry’s 0.7% rise 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 35.7% compared with the industry’s 12.2%. Shares of the company have decreased 33.9% against the industry’s 0.7% rise over the past year.
PODD’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 105.1%. In the last reported quarter, it delivered an average earnings surprise of 77.5%.
DaVita, sporting a Zacks Rank #1 at present, has an estimated long-term earnings growth rate of 17.3% compared with the industry’s 11.5%. Shares of DVA have rallied 26.7% compared with the industry’s 4.4% rise over the past year.
DVA’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.6%. In the last reported quarter, it delivered an average earnings surprise of 48.4%.