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IDEXX Laboratories (IDXX) Beats on Q3 Earnings, EPS View Up
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IDEXX Laboratories, Inc. (IDXX - Free Report) reported third-quarter 2018 earnings per share (EPS) of $1.05, up 32.9% year over year on a reported basis and 39% on a comparable constant exchange rate (CER) basis. The figure also surpassed the Zacks Consensus Estimate of 98 cents by 7.1%.
Revenues in Detail
Revenues rose 10.9% year over year (up 12% on organic basis) to $545.4 million. However, the metric was somewhat in line with the Zacks Consensus Estimate.
The upside was driven by strong global gains in Companion Animal Group (CAG) Diagnostics recurring revenues, including high-teens revenue gains in IDEXX VetLab across consumable and double-digit reference laboratory diagnostic and consulting services. Further, steady rapid assay sales growth contributed to the top line.
Segmental Analysis
IDEXX derives revenues from four operating segments: CAG; Water; Livestock, Poultry and Dairy (LPD); and Other.
In the third quarter, CAG revenues rose 12% (up 12.9% organically) year over year to $478.1 million. Water segment’s revenues were up 6.7% from the prior-year quarter (up 8.9% organically) to $33.1 million. LPD revenues grew 3.6% (up 7% organically) to $29.4 million. Revenues at the Other segment declined 17.7% on a reported basis to $4.8 million.
Margins
Gross profit increased 11.5% to $305.6 million in the reported quarter in spite of a 10% rise in cost of revenues to $239.8 million. Accordingly, gross margin expanded 30 basis points (bps) to 56%.
IDEXX Laboratories, Inc. Price, Consensus and EPS Surprise
Sales and marketing expenses rose 7.1% to $95.1 million, while general and administrative expenses increased 11.9% to $64 million. Research and development expenses rose 5.8% to $29.2 million. Operating margin in the quarter improved 110 bps to 21.5%.
Financial Position
IDEXX exited the third quarter of 2018 with cash and cash equivalents of $146.9 million, compared with $174.6 million at the end of the second quarter. Net cash provided by operating activities was $264.4 million for the nine months ending Sep 30, 2018, compared with $252.2 million in the year-ago period.
2018 Guidance Updated
IDEXX has lowered the high end of its 2018 revenue outlook to the range of $2,205-$2,215 million (earlier $2,205-$2,230 million). Moreover, the company has lowered the high end of its 2018 revenue organic growth guidance to 11.5-12% from the previous 11.5-12.5%. The Zacks Consensus Estimate for 2018 revenues is pegged at $2.22 billion.
Management raised the EPS guidance to $4.16-$4.21 from the earlier $4.10-$4.20, supported by continued operating margin expansion and expected rise in share-based compensation tax benefits. The updated outlook represents EPS growth of 41-43% on a reported basis compared with 39-43% stated previously. The Zacks Consensus Estimate for 2018 adjusted EPS is pegged at $4.19, within the guided range.
2019 Preliminary Outlook Initiated
IDEXX also provided a preliminary guidance for 2019. Full-year revenues are expected in the range of $2,385-$2,425 million, reflecting organic revenue growth of 9.5-11% (reported 8-9.5%). EPS, in the meanwhile, is projected in the range of $4.61-$4.75, reflecting annualized growth of 15-18% (constant currency) or 10–14% (reported). The current Zacks Consensus Estimate for EPS stands at $4.86 on revenues of $2.44 billion.
Our Take
IDEXX exited the third quarter on a mixed note. However, solid year-over year growth in organic revenues and a raised EPS guidance for 2018 are encouraging. The company also witnessed strong Catalyst chemistry analyzer placements in the quarter.
The top-line in the quarter was driven by strong sales at the CAG business. The companion animal market fundamentals remain solid with tremendous global runway for growth. Management’s innovation-based, multi-modality global strategy, enabled by enhanced commercial capability, accelerated recurring CAG Diagnostics revenue growth.
Intuitive Surgical reported third-quarter 2018 adjusted EPS of $2.83, which beat the Zacks Consensus Estimate of $2.65. Revenues totaled $920.9 million, also surpassing the consensus estimate of $918.6 million.
Stryker posted third-quarter 2018 adjusted EPS of $1.69, steering past the Zacks Consensus Estimate of $1.68. Operating margin was 17.8%, up 30 bps.
Merit Medical reported third-quarter 2018 adjusted EPS of 47 cents, which trumped the Zacks Consensus Estimate of 42 cents. Revenues of $221.6 million edged past the consensus estimate of $218 million.
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IDEXX Laboratories (IDXX) Beats on Q3 Earnings, EPS View Up
IDEXX Laboratories, Inc. (IDXX - Free Report) reported third-quarter 2018 earnings per share (EPS) of $1.05, up 32.9% year over year on a reported basis and 39% on a comparable constant exchange rate (CER) basis. The figure also surpassed the Zacks Consensus Estimate of 98 cents by 7.1%.
Revenues in Detail
Revenues rose 10.9% year over year (up 12% on organic basis) to $545.4 million. However, the metric was somewhat in line with the Zacks Consensus Estimate.
The upside was driven by strong global gains in Companion Animal Group (CAG) Diagnostics recurring revenues, including high-teens revenue gains in IDEXX VetLab across consumable and double-digit reference laboratory diagnostic and consulting services. Further, steady rapid assay sales growth contributed to the top line.
Segmental Analysis
IDEXX derives revenues from four operating segments: CAG; Water; Livestock, Poultry and Dairy (LPD); and Other.
In the third quarter, CAG revenues rose 12% (up 12.9% organically) year over year to $478.1 million. Water segment’s revenues were up 6.7% from the prior-year quarter (up 8.9% organically) to $33.1 million. LPD revenues grew 3.6% (up 7% organically) to $29.4 million. Revenues at the Other segment declined 17.7% on a reported basis to $4.8 million.
Margins
Gross profit increased 11.5% to $305.6 million in the reported quarter in spite of a 10% rise in cost of revenues to $239.8 million. Accordingly, gross margin expanded 30 basis points (bps) to 56%.
IDEXX Laboratories, Inc. Price, Consensus and EPS Surprise
IDEXX Laboratories, Inc. Price, Consensus and EPS Surprise | IDEXX Laboratories, Inc. Quote
Sales and marketing expenses rose 7.1% to $95.1 million, while general and administrative expenses increased 11.9% to $64 million. Research and development expenses rose 5.8% to $29.2 million. Operating margin in the quarter improved 110 bps to 21.5%.
Financial Position
IDEXX exited the third quarter of 2018 with cash and cash equivalents of $146.9 million, compared with $174.6 million at the end of the second quarter. Net cash provided by operating activities was $264.4 million for the nine months ending Sep 30, 2018, compared with $252.2 million in the year-ago period.
2018 Guidance Updated
IDEXX has lowered the high end of its 2018 revenue outlook to the range of $2,205-$2,215 million (earlier $2,205-$2,230 million). Moreover, the company has lowered the high end of its 2018 revenue organic growth guidance to 11.5-12% from the previous 11.5-12.5%. The Zacks Consensus Estimate for 2018 revenues is pegged at $2.22 billion.
Management raised the EPS guidance to $4.16-$4.21 from the earlier $4.10-$4.20, supported by continued operating margin expansion and expected rise in share-based compensation tax benefits. The updated outlook represents EPS growth of 41-43% on a reported basis compared with 39-43% stated previously. The Zacks Consensus Estimate for 2018 adjusted EPS is pegged at $4.19, within the guided range.
2019 Preliminary Outlook Initiated
IDEXX also provided a preliminary guidance for 2019. Full-year revenues are expected in the range of $2,385-$2,425 million, reflecting organic revenue growth of 9.5-11% (reported 8-9.5%). EPS, in the meanwhile, is projected in the range of $4.61-$4.75, reflecting annualized growth of 15-18% (constant currency) or 10–14% (reported). The current Zacks Consensus Estimate for EPS stands at $4.86 on revenues of $2.44 billion.
Our Take
IDEXX exited the third quarter on a mixed note. However, solid year-over year growth in organic revenues and a raised EPS guidance for 2018 are encouraging. The company also witnessed strong Catalyst chemistry analyzer placements in the quarter.
The top-line in the quarter was driven by strong sales at the CAG business. The companion animal market fundamentals remain solid with tremendous global runway for growth. Management’s innovation-based, multi-modality global strategy, enabled by enhanced commercial capability, accelerated recurring CAG Diagnostics revenue growth.
Zacks Rank & Key Picks
IDEXX has a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader medical space, which reported solid earnings this season, are Intuitive Surgical (ISRG - Free Report) , Stryker Corporation (SYK - Free Report) and Merit Medical Systems, Inc. (MMSI - Free Report) . All the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Intuitive Surgical reported third-quarter 2018 adjusted EPS of $2.83, which beat the Zacks Consensus Estimate of $2.65. Revenues totaled $920.9 million, also surpassing the consensus estimate of $918.6 million.
Stryker posted third-quarter 2018 adjusted EPS of $1.69, steering past the Zacks Consensus Estimate of $1.68. Operating margin was 17.8%, up 30 bps.
Merit Medical reported third-quarter 2018 adjusted EPS of 47 cents, which trumped the Zacks Consensus Estimate of 42 cents. Revenues of $221.6 million edged past the consensus estimate of $218 million.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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