IDEXX Laboratories, Inc. (NASDAQ:IDXX) is slated to report fourth-quarter 2019 results on Jan 31, before market open. In the last reported quarter, the company delivered a positive earnings surprise of 9.7%. The company has trailing four-quarter earnings beat of 8.9%, on average.
Let's take a look at how things are shaping up prior to this announcement.
Key Catalysts
IDEXX's strong earnings trajectory is expected to have sustained through the fourth quarter, courtesy of a global surge in Companion Animal Group (CAG) Diagnostic revenues.
Of late, the company has been generating solid organic revenues in this segment on strong contributions from consumable and reference lab as well as the growing adoption of rapid assays, and Veterinary Software, Services and Diagnostic Imaging Systems.
In the United States, IDEXX has been generating strong CAG Diagnostic recurring revenues, led by steady growth in reference lab, consumables and rapid assay sales. Growth in the Veterinary Software portfolio can be attributed to strength in the global catalyst install base of Cornerstone, Neo, Animana and Smart Flow systems.
International reference laboratory services are likely to have seen a robust fourth quarter, courtesy of the company’s measures for commercial expansion, like the IDEXX 360 programs, while maintaining momentum in international markets’ catalyst install bases. Through the fourth quarter, the rapid assay business is expected to have grown on the continued expansion of global SNAP Pro installed base and robust performance of its 4Dx plus franchise. Global consumable revenues are also expected to reflect strong growth for the to-be-reported quarter, led by increases in diagnostic test utilization and expansion of the company’s installed instrument base.
The company earlier expected organic growth of 11.5-12% for 2019 CAG Diagnostic recurring revenues. We assume that this segment has started contributing to the company’s top line from the fourth quarter.
The Zacks Consensus Estimate of $525 million for CAG Diagnostics fourth-quarter revenues suggests a 9.6% improvement from the year-ago quarter’s reported figure.
Other Factors
The Water Business, of late, is gaining traction from encouraging test results in the United States and the global go-direct initiatives. The business witnessed 7% organic growth in the last reported quarter, driven by impressive growth in the United States, and overseas markets. This trend most likely continued in the fourth quarter.
The consensus mark for Water business revenues stands at $33.3 million for the to-be-reported quarter, implying a 9.9% increase from the year-earlier quarter’s reported number.
Strong organic revenue growth in the Livestock, Poultry and Dairy (LPD) segment, driven by solid demand for new diagnostic testing programs and increase in diagnostic testing for alternative poultry food sources, is likely to show on the company’s fourth-quarter results.
However, increased pressure on China LPD revenues in the last reported quarter is likely to have adversely impacted the company’s top line during the fourth quarter.
Trend in Estimate Revisions
The Zacks Consensus Estimate for fourth-quarter 2019 revenues is pegged at $599.9 million, indicating a 9.2% rise from the prior-year quarter’s reported figure. The same for earnings is pegged at 91 cents, suggesting a 7.1% decline from the figure reported in the year-ago quarter.
Earnings Whispers
Per our proven model, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to deliver a positive earnings surprise. But this is not the case here as you will see below.
Earnings ESP: IDEXX 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: It carries a Zacks Rank #3.
Stocks Worth a Look
Here are a few medical stocks worth considering from the same space with the right mix of elements to surpass expectations this earnings season.
Alexion Pharmaceuticals (NASDAQ:ALXN) has an Earnings ESP of +5.54% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Exact Sciences Corporation (NASDAQ:EXAS) has an Earnings ESP of +12.08% and a Zacks Rank of 3.
NuVasive (NASDAQ:NUVA) has an Earnings ESP of +0.88% and a Zacks Rank of 3.
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IDEXX Laboratories, Inc. (IDXX): Free Stock Analysis Report
NuVasive, Inc. (NUVA): Free Stock Analysis Report
Exact Sciences Corporation (EXAS): Free Stock Analysis Report
Alexion Pharmaceuticals, Inc. (ALXN): Free Stock Analysis Report
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