IDEXX Laboratories, Inc. IDXX is slated to report fourth-quarter 2021 results on Feb 2, before market open.
In the last-reported quarter, the company’s earnings per share of $2.03 surpassed the Zacks Consensus Estimate by 7.9%. Moreover, earnings outpaced the consensus estimate in the trailing four quarters, the average beat being 25.40%.
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 is likely to have contributed to the U.S. CAG Diagnostic recurring revenue gains. In its earnings call for the third quarter, the company noted that U.S. clinical visit growth rose 2%, with strength across non-wellness and wellness visit categories. The CAG arm is also likely to gain from the organic growth in CAG diagnostic instrument revenues, as it did in the prior quarter.
We expect the company to report significant growth in IDEXX’s global catalyst installed base in the fourth 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 4307 units. The company also recorded 344 catalyst placements on continued strong demand from high-volume customers in the prior quarter. Further, the company’s premium hematology placements were up 62% in the last-reported quarter. In the fourth quarter, despite the emergence of the new variants of COVID-19, the overall opening up of the economy is unabated. Further, the global rollout of ProCyte One continues to support strong overall placement momentum with the majority of our ProCyte One placements. Under such a situation, we expect the company to have recognized strong market demand leading to high instrument placements. These developments are likely to have driven the fourth-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 and diagnostic are also expected to report strong growth for the fourth quarter on gains in PIMS placements and continued strong growth in related recurring service, similar to the prior quarter, with initial benefits from the recent ezyVet buyout.
The Zacks Consensus Estimate for CAG revenues is pegged at $696 million, suggesting an improvement of 10.5% from the year-ago quarter’s reported figure.
IDEXX’s Water business is expected to have put up an impressive revenue performance for the to-be-reported quarter 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 $36.4 million, suggesting a rise of 10% from the year-ago quarter’s reported figure.
IDEXX Laboratories, Inc. Price and EPS Surprise
IDEXX Laboratories, Inc. Price and EPS Surprise
IDEXX Laboratories, Inc. price-eps-surprise | IDEXX Laboratories, Inc. Quote
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 third quarter, revenue growth in the LPD arm was hampered by relatively lower herd health screening levels owing to reduced exports, additional impacts in China, changes in local ASF disease management approaches, lower pork prices, and changes in government requirements related to livestock infectious disease testing programs. These trends are expected to have continued in the fourth quarter, affecting the top line. With this expectation, the company has subsequently slashed its revenue expectations for the LPD arm for the second half of 2021.
The Zacks Consensus Estimate for LPD revenues is pegged at $33.3 million, suggesting a fall of 21.7% from the last-reported quarter 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 #4 (Sell).
Stocks With Favorable Combinations
Here are a few medical stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.
AMN Healthcare Services, Inc. AMN has an Earnings ESP of +10.29% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare’s long-term earnings growth rate is estimated at 16.2%. AMN’s earnings yield of 6.9% compares favorably with the industry’s 1.1%.
Henry Schein, Inc. HSIC has an Earnings ESP of +2.62% and a Zacks Rank of 2.
Henry Schein’s long-term earnings growth rate is estimated at 11.8%. HSIC's earnings yield of 6.4% compares favorably with the industry’s 4.4%.
Hologic, Inc. HOLX has an Earnings ESP of +1.56% and a Zacks Rank #2.
Hologic’s long-term earnings growth rate is estimated at 7.4%. HOLX's earnings yield of 5.5% compares favorably with the industry’s (5.4%).
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