IDEXX Laboratories, Inc.
IDXX
is slated to report
first-quarter
2022 results on May 4, before market open.
In the last-reported quarter, the company’s earnings per share of $1.89 surpassed the Zacks Consensus Estimate by 13.2%. Moreover, earnings outpaced the consensus estimate in the trailing four quarters, the average beat being 18.55%.
Let’s take a look at how things have shaped up prior to this announcement.
Factors at Play
The
Companion Animal Group
(CAG) business is expected to have gained from consistent and healthy organic revenue growth in the to-be-reported quarter, backed by strong performance in CAG diagnostics recurring business in the United States and internationally. Robust growth in the U.S. clinical business and continued positive demand trends are likely to have contributed to the U.S. CAG Diagnostic recurring revenue gains. In its earnings call for the fourth quarter, the company noted that U.S. clinical visit growth was 2.2%, with strength across non-wellness and wellness visit categories.
We expect the company to report significant growth in IDEXX’s global catalyst installed base in the first quarter on new instrument placements and high customer retention levels, as experienced in the prior quarter. Notably, total premium placements in the third quarter totaled 5258 units, reflecting a 29% uptick from prior levels. Further, the company’s registered strong global placement growth across its major platforms year on year, with Catalyst up 8%, SediVue up 20% and premium hematology up 72%, supported by the continued global rollout of ProCyte One. We expect the company to have recognized strong market demand leading to high instrument placements throughout the first quarter, thus likely to have driven the first-quarter top line.
The ezyVet acquisition, completed in June, expanded IDEXX’s cloud-based software capability and is expected to have fueled growth in the CAG arm. The company’s veterinary software is also expected to report strong growth for the first quarter on gains from PIMS placements. During the fourth-quarter earnings call, the company noted that the PIMS is being used by over 30,000 practices globally, out of which 81% of PIMS placements were cloud-based in the quarter. We believe this major development along with ongoing benefits from the recent ezyVet buyout have contributed significantly to first-quarter revenues.
In January 2022, IDEXX entered into a partnership deal with San Diego-based PetDx Inc. – the Liquid Biopsy Company for Pets. The collaboration is aimed to expand access to PetDx canine cancer liquid biopsy test, OncoK9, leveraging IDEXX’s huge distribution network. We believe this development to likely have contributed to the company’s CAG diagnostics revenues in the first quarter.
The Zacks Consensus Estimate for CAG revenues is pegged at $767 million, suggesting an improvement of 10.7% from the year-ago quarter’s figure.
IDEXX’s
Water
business is expected to have put up an impressive revenue performance for the to-be-reported quarter as it continues to track back toward pre-COVID growth levels, supported by solid gains across compliance and noncompliance testing categories. As economies reopen, the ongoing recovery in Water Testing demand is likely to have driven growth, as it did in the previous quarter.
The Zacks Consensus Estimate for Water revenues is pegged at $36.5 million, suggesting a rise of 7.3% from the year-ago quarter’s reported figure.
Within the
Livestock, Poultry and Dairy
(LPD) arm, we expect revenue growth to have been impacted by reduced demand in key areas such as African swine fever testing. During the fourth quarter, revenue growth in the LPD arm was hampered by relatively lower herd health screening levels owing to reduced exports, ramping of African swine fever testing in China as well as a year-on-year decline in human COVID PCR testing revenues. These trends are expected to have continued in the first quarter, affecting the top line.
IDEXX Laboratories, Inc. Price and EPS Surprise
In January 2022, IDEXX expanded its oncology testing platform with an additional test to support veterinarians in better identifying, staging, treating and monitoring several prevalent cancer types. This test menu is expected to have witnessed strong market adoption, thus adding to LPD arm revenues in the to-be-reported quarter.
The Zacks Consensus Estimate for LPD revenues is pegged at $32.9 million, suggesting a fall of 16.1% from the last-reported quarter figure.
The Estimate Picture
For first-quarter 2022, the Zacks Consensus Estimate for total revenues of $841.2 million implies an improvement of 8.2% from the prior-year quarter’s reported figure.
The consensus estimate for earnings per share is pegged at $2.26, indicating a decline of 3.8% from the prior-year quarter’s reported figure.
What Our Model Suggests
Per our proven model, a stock with the combination of a positive
Earnings ESP
and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has higher chances of beating estimates. That is not the case here, as you can see:
Earnings ESP:
The company has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our
Earnings ESP Filter
.
Zacks Rank:
The company currently carries a Zacks Rank #3.
Stocks Worth a Look
Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.
Computer Programs and Systems
CPSI
has an Earnings ESP of +1.52% and a Zacks Rank of #1. Computer Programs and Systems will release first-quarter 2022 results on May 3. You can see
the complete list of today’s Zacks #1 Rank stocks here
.
Computer Programs and Systems’ long-term earnings growth rate is estimated at 14%. CPSI’s earnings yield of 8.47% compares favorably with the industry’s (7.51%).
Alcon Inc.
ALC
has an Earnings ESP of +10.04% and a Zacks Rank of #2. Alcon is expected to release first-quarter 2022 results on May 3.
Alcon’s long-term earnings growth rate is estimated at 14.7%. ALC’s earnings yield of 3.08% compares with the industry’s (7.01%).
Meridian Bioscience, Inc.
VIVO
has an Earnings ESP of +26.32% and a Zacks Rank of #2. Meridian Bioscience is scheduled to release second-quarter fiscal 2022 results on May 6.
Meridian Bioscience’s long-term historical earnings growth rate is 16.3%. VIVO’s earnings yield of 5.23% compares favorably with the industry’s 0.89%.
Stay on top of upcoming earnings announcements with the
Zacks Earnings Calendar
.
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