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IDEXX (IDXX) Q4 Earnings Top Estimates, Raises '19 EPS View

IDEXX Laboratories, Inc. IDXX reported fourth-quarter 2018 earnings per share (EPS) of 98 cents, a 127.9% year over year surge on a reported basis and a 40% rise on a comparable constant exchange rate (CER) basis. The figure also surpassed the Zacks Consensus Estimate by 8.9%.

Full-year EPS came in at $4.26, a 44.8% rise from the year ago period (up 36% at CER). This remained ahead of the company-projected EPS range of $4.16-$4.21.

Revenues in Detail

Fourth-quarter revenues rose 8.6% year over year (up 10% on an organic basis) to $549.4 million. The metric exceeded the Zacks Consensus Estimate by 0.7%.

The upside was driven by strong global gains in Companion Animal Group (CAG) Diagnostics recurring revenues along with expansion in global premium instrument installed base.

IDEXX Laboratories, Inc. Price, Consensus and EPS Surprise

IDEXX Laboratories, Inc. Price, Consensus and EPS Surprise | IDEXX Laboratories, Inc. Quote

For 2018, the company reported revenues of $2.21 billion, a 12% rise from the year-ago period (same organically).The reported figure fell within the company’s guidance range of $2,205-$2,215 million.

Segmental Analysis

IDEXX derives revenues from four operating segments: CAG; Water; Livestock, Poultry and Dairy (LPD); and Other.

In the fourth quarter, CAG revenues rose 10% (up 12% organically) year over year to $479 million. Water segment’s revenues were up 5% from the prior-year quarter (up 8% organically) to $30.3 million. LPD revenues declined 9% (down 5% organically) to $33.9 million.  Revenues at the Other segment also declined 5.7% on a reported basis to $6.2 million.

Margins

Gross profit in the fourth quarter increased 10.2% to $300.4 million in the reported quarter in spite of a 6.6% rise in cost of revenues to $249 million. Accordingly, gross margin expanded 84 basis points (bps) to 56%.

Sales and marketing expenses rose 5.9% to $95.9 million, while general and administrative expenses increased 6.6% to $58.9 million. Research and development expenses rose 4.6% to $30.1 million. Operating margin in the quarter improved 167 bps to 20.9%.

Financial Position

IDEXX exited 2018 with cash and cash equivalents of $123.8 million, compared with $187.7 million at the end of 2017. Net cash provided by operating activities was $400.1 million for 2018, compared with $373.3 million in the year-ago period.

2019 Outlook Updated

IDEXX reaffirmed its revenue guidance for 2019. Full-year revenues are still expected in the range of $2,385-$2,425 million, reflecting organic revenue growth of 9.5-11% (reported 8-9.5%).

EPS projection, in the meanwhile, has been raised to the range of $4.66-$4.78 (from earlier-provided range of $4.61-$4.75), reflecting annualized growth of 15-18% (constant currency) or 9–12% (reported). The current Zacks Consensus Estimate for EPS stands at $4.68 on revenues of $2.41 billion.

Our Take

IDEXX exited the fourth quarter on a Promising note. Solid year-over year growth in organic revenues and a raised EPS guidance for 2019 are encouraging. The top-line in the quarter was driven by strong sales at the CAG business. The company witnessed strong gains in CAG Diagnostics recurring revenue and global premium instrument installed base in the quarter.

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 MedTech stocks flaunting solid results in respective quarters are Varian Medical Systems VAR, Surmodics, Inc. SRDX and AngioDynamics ANGO.

Varian’s first-quarter fiscal 2019 adjusted EPS came in at $1.06, in line with the Zacks Consensus Estimate. Revenues of $741 million outpaced the consensus mark of $717.9 million. The stock carries a Zacks Rank of 2.

Surmodics reported adjusted earnings per share (EPS) of 12 cents in first-quarter fiscal 2019, comparing favorably with the Zacks Consensus Estimate of a loss of a penny. Earnings rose 20% from the year-ago quarter’s figure. The stock is a Zacks #2 Ranked player.

AngioDynamics’ second-quarter fiscal 2019 adjusted EPS of 22 cents surpassed the Zacks Consensus Estimate by a penny. Revenues totaled $91.5 million, which outshined the consensus estimate by 2.9%. The stock sports a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

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