IDEXX Laboratories (IDXX) Raised To Buy On Solid Prospects

On May 22, IDEXX Laboratories, Inc. (NASDAQ:IDXX) , a leading manufacturer of products and services primarily for the companion animal veterinary, was raised by a notch to a Zacks Rank #2 (Buy).

Over the past three months, IDEXX has significantly outperformed the Zacks categorized Medical - Instruments industry with respect to share price. The stock has gained 13.9% over this period in comparison to 6.3% gain of the broader industry. The company has also recorded a 5-year CAGR of 8.2% for revenues and an impressive long-term earnings growth rate of 12.4%. With the company’s raised earnings guidance for 2017, we expect this strong momentum to continue in the days ahead.

Further, IDEXX’s estimate revision trend for the current year is favorable. In the past 30 days, five estimates have moved up with no downward revision. The magnitude of estimate revision over the same time period increased from 50 cents per share to 60 cents.

Notably, the company has been witnessing strong growth at its companion animal business banking on strong innovation-based global strategy with enhanced commercial capability. For full-year 2017, management has maintained an outlook for solid average companion animal diagnostics at the range of 2% to 3% in the U.S., augmenting strong volume trends.

Apart from this, IDEXX’s water business is performing well supported by continued progress in developing core U.S. and European markets and strong growth in the Asia Pacific. Management is also working on sustaining organic growth in this highly lucrative business.

IDEXX also continues to demonstrate solid growth globally with strong international expansion. In recent times, the company has experienced solid double-digit organic lab revenue gains in the international markets supported by growth in companion animal diagnostics business and rapid assay sales.

In addition, management has witnessed robust growth in reference labs in the core markets of Europe, Australia and Japan. The upside in instrument revenues is being driven by the IDEXX’s SediVue international launch in selected markets.

Additionally, the company has a strong cash balance that enables it to adopt attractive share repurchase programs and in turn provide solid returns to investors.

On the flip side, IDEXX's high dependence on third-party distributors and intense competition continue to pose threats. Moreover, foreign currency fluctuations are expected to consistently dampen IDEXX’s prospects.

Other Key Picks

Other top-ranked stocks in the broader medical sector are Luminex Corporation (NASDAQ:LMNX) , Inogen, Inc. (NASDAQ:INGN) and Edwards Lifesciences, Inc. (NYSE:EW) . Notably, Luminex and Inogen sport a Zacks Rank #1 (Strong Buy), while Edwards Lifesciences carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Luminex has an expected long-term adjusted earnings growth of almost 16.3%. The stock added roughly 9% over the last three months.

Inogen has a long-term expected earnings growth rate of 17.5%. The stock has a solid one-year return of roughly 77.7%.

Edwards Lifesciences recorded a stellar EPS growth rate of almost 16% (last 3–5 years of actual earnings).

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