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Should You Continue to Hold Bio-Rad Stock in Your Portfolio?
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Bio-Rad Laboratories, Inc.’s (BIO - Free Report) robust QX600 Droplet Digital PCR (ddPCR) platform positions the company well to capture a major share in the booming digital PCR space. The clinical diagnostics business continues to gain momentum while building a position in new molecular diagnostics areas. The company’s emphasis on international expansion is encouraging.
Meanwhile, the persistent softness in the Biopharma segment and negative economic impacts on Bio-Rad’s margin performance raise concerns.
In the past year, shares of this Zacks Rank #3 (Hold) company have dropped 4.8% against the industry’s 24.7% growth. The S&P 500 composite has seen a 33.7% rise in the same time frame.
The renowned manufacturer and global supplier of clinical diagnostics and life science research products has a market capitalization of $893.9 million. Bio-Rad’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 4.1%.
Let’s delve deeper.
Bio-Rad’s Key Drivers
Strategic Moves to Grow Digital PCR Business: The pipeline of Bio-Rad’s QX600 Droplet ddPCR platform is currently robust and growing. Of late, the Life Science business has been strategically maintaining a focus on biopharma, especially for digital PCR and process chromatography products and new products in development around cell biology. The newly launched ddPCR assay is gaining a share in the oncology, and cell and therapy markets.
Through its agreements with Allegheny Health Network and Oncocyte Corporation, Bio-Rad is advancing its strategy and accelerating the platform's penetration into advanced clinical diagnostic applications. It has also entered into a purchase agreement for a novel, cutting-edge platform that will utilize its core droplet technology. The platform will enable high throughput discovery of novel antibodies and T cell receptors and complement its phage display library.
Clinical Diagnostics Gains Traction: Within this business, the diabetes franchise is seeing elevated growth and a substantial improvement in the immunohematology and quality control businesses. Bio-Rad recently launched the IH-500 next instrument, designed to enhance the functionality of the system along with increased security from potential cyberattacks. With production ramping up in Singapore following the manufacturing transition, management has better visibility on future Diagnostics output and backlog reduction.
Image Source: Zacks Investment Research
In the second quarter of 2024, the growth of the clinical diagnostics group was backed by increased demand for quality controls and blood typing products on a geographic basis. The company continues to invest in supporting the growth of this segment while building a position in new molecular diagnostics segments.
Focus on International Markets: Bio-Rad conducts significant international operations, having direct distribution channels in more than 35 countries outside the United States. In the second quarter of 2024, despite soft market conditions in APAC regions for the Life Science business, the company remained optimistic about the improvement in the outlook toward the end of the year and into 2025. The lackluster business scenario in key European markets, due to an unfavorable funding environment in Germany, is expected to gradually get offset by a more modest improvement in funding outlooks in the United Kingdom, France and other European Union countries.
Factors Weighing on Bio-Rad
Soft Biopharma Segment: Since 2023, Bio-Rad has been witnessing softness in smaller BioPharma companies, historically a strong demand area for life science products. This directly correlates with the funding constraints the broader pharmaceutical industry had started to experience. In the second quarter of 2024, negative BioPharma macro trends persisted.
The company also experienced weaker second-quarter sales in Asia as China is currently entangled by a challenging research funding environment, and Japan is facing constrained funding issues. The Korean government's spending on life science research remained soft throughout the second quarter as part of the deficit reduction.
Economic Concerns Pressuring Margins: In recent times, Bio-Rad’s margin performance has been affected by the inflationary trend of elevated raw material costs, increased logistics costs and higher employee-related expenses. In the second quarter of 2024, the company’s gross margin was also impacted by an unfavorable product mix, with a higher-than-anticipated percentage of instrument sales versus reagents, as well as lower-than-projected revenues in the Life Science Group.
BIO Stock Estimate Trends
The Zacks Consensus Estimate for Bio-Rad’s 2024 earnings per share (EPS) has remained constant at $10.31 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $2.59 billion, which indicates a 3% fall from the year-ago reported number.
TransMedix Group’s earnings are expected to surge 259.7% in 2024. Its shares have rallied 197.5% compared with the industry’s 22.7% growth in the past year. TMDX’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 287.5%.
AxoGen has an estimated 2024 earnings growth rate of 94.1% compared with the industry’s 12.8%. Shares of the company have surged 180.6% compared with the industry’s 22.7% growth in the past year. AXGN’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 96.5%.
Phibro Animal Health has an estimated fiscal 2025 earnings growth rate of 21% compared with the industry’s 12.6% growth. Shares of the company have rallied 76.6% compared with the industry’s 24.2% growth in the past year. PAHC’s earnings surpassed estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 4.1%.
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Should You Continue to Hold Bio-Rad Stock in Your Portfolio?
Bio-Rad Laboratories, Inc.’s (BIO - Free Report) robust QX600 Droplet Digital PCR (ddPCR) platform positions the company well to capture a major share in the booming digital PCR space. The clinical diagnostics business continues to gain momentum while building a position in new molecular diagnostics areas. The company’s emphasis on international expansion is encouraging.
Meanwhile, the persistent softness in the Biopharma segment and negative economic impacts on Bio-Rad’s margin performance raise concerns.
In the past year, shares of this Zacks Rank #3 (Hold) company have dropped 4.8% against the industry’s 24.7% growth. The S&P 500 composite has seen a 33.7% rise in the same time frame.
The renowned manufacturer and global supplier of clinical diagnostics and life science research products has a market capitalization of $893.9 million. Bio-Rad’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 4.1%.
Let’s delve deeper.
Bio-Rad’s Key Drivers
Strategic Moves to Grow Digital PCR Business: The pipeline of Bio-Rad’s QX600 Droplet ddPCR platform is currently robust and growing. Of late, the Life Science business has been strategically maintaining a focus on biopharma, especially for digital PCR and process chromatography products and new products in development around cell biology. The newly launched ddPCR assay is gaining a share in the oncology, and cell and therapy markets.
Through its agreements with Allegheny Health Network and Oncocyte Corporation, Bio-Rad is advancing its strategy and accelerating the platform's penetration into advanced clinical diagnostic applications. It has also entered into a purchase agreement for a novel, cutting-edge platform that will utilize its core droplet technology. The platform will enable high throughput discovery of novel antibodies and T cell receptors and complement its phage display library.
Clinical Diagnostics Gains Traction: Within this business, the diabetes franchise is seeing elevated growth and a substantial improvement in the immunohematology and quality control businesses. Bio-Rad recently launched the IH-500 next instrument, designed to enhance the functionality of the system along with increased security from potential cyberattacks. With production ramping up in Singapore following the manufacturing transition, management has better visibility on future Diagnostics output and backlog reduction.
Image Source: Zacks Investment Research
In the second quarter of 2024, the growth of the clinical diagnostics group was backed by increased demand for quality controls and blood typing products on a geographic basis. The company continues to invest in supporting the growth of this segment while building a position in new molecular diagnostics segments.
Focus on International Markets: Bio-Rad conducts significant international operations, having direct distribution channels in more than 35 countries outside the United States. In the second quarter of 2024, despite soft market conditions in APAC regions for the Life Science business, the company remained optimistic about the improvement in the outlook toward the end of the year and into 2025. The lackluster business scenario in key European markets, due to an unfavorable funding environment in Germany, is expected to gradually get offset by a more modest improvement in funding outlooks in the United Kingdom, France and other European Union countries.
Factors Weighing on Bio-Rad
Soft Biopharma Segment: Since 2023, Bio-Rad has been witnessing softness in smaller BioPharma companies, historically a strong demand area for life science products. This directly correlates with the funding constraints the broader pharmaceutical industry had started to experience. In the second quarter of 2024, negative BioPharma macro trends persisted.
The company also experienced weaker second-quarter sales in Asia as China is currently entangled by a challenging research funding environment, and Japan is facing constrained funding issues. The Korean government's spending on life science research remained soft throughout the second quarter as part of the deficit reduction.
Economic Concerns Pressuring Margins: In recent times, Bio-Rad’s margin performance has been affected by the inflationary trend of elevated raw material costs, increased logistics costs and higher employee-related expenses. In the second quarter of 2024, the company’s gross margin was also impacted by an unfavorable product mix, with a higher-than-anticipated percentage of instrument sales versus reagents, as well as lower-than-projected revenues in the Life Science Group.
BIO Stock Estimate Trends
The Zacks Consensus Estimate for Bio-Rad’s 2024 earnings per share (EPS) has remained constant at $10.31 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $2.59 billion, which indicates a 3% fall from the year-ago reported number.
Top MedTech Picks
Some better-ranked stocks in the broader medical space are TransMedix Group (TMDX - Free Report) , AxoGen (AXGN - Free Report) and Phibro Animal Health (PAHC - Free Report) . While TransMedix Group currently sports a Zacks Rank #1 (Strong Buy), AxoGen and Phibro Animal Health each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
TransMedix Group’s earnings are expected to surge 259.7% in 2024. Its shares have rallied 197.5% compared with the industry’s 22.7% growth in the past year. TMDX’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 287.5%.
AxoGen has an estimated 2024 earnings growth rate of 94.1% compared with the industry’s 12.8%. Shares of the company have surged 180.6% compared with the industry’s 22.7% growth in the past year. AXGN’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 96.5%.
Phibro Animal Health has an estimated fiscal 2025 earnings growth rate of 21% compared with the industry’s 12.6% growth. Shares of the company have rallied 76.6% compared with the industry’s 24.2% growth in the past year. PAHC’s earnings surpassed estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 4.1%.