Yahoo Finance Idexx (IDXX) Down 2.9% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Idexx Laboratories (IDXX). Shares have lost about 2.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Idexx due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
IDEXX Q1 Earnings Beat Estimates, Margins Increase
IDEXX Laboratories posted first-quarter 2023 earnings per share of $2.55, up 12.3% year over year. The figure surpassed the Zacks Consensus Estimate by 7.1%.
Comparable constant-currency earnings per share totaled $2.60 in the first quarter of 2023, up 17.6% year over year.
Revenues in Detail
First-quarter revenues increased 8% year over year to $900 million. Organically, growth was 10%. The metric exceeded the Zacks Consensus Estimate by 1.5%.
The year-over-year upside was primarily driven by 9% reported and 12% organic growth in CAG Diagnostics’ recurring revenues. U.S. CAG Diagnostics’ recurring revenues increased 14% on a reported and organic basis.
Veterinary software, services and diagnostic imaging systems revenues increased 13% as reported and 14% organically, reflecting high growth in recurring revenues and continued strong quarterly placements of cloud-based software solutions.
Segmental Analysis
IDEXX derives revenues from four operating segments — CAG, Water, Livestock, Poultry and Dairy (LPD) and Other.
In the first quarter, CAG revenues rose 9% on a reported basis (up 11% organically) year over year to $827.3 million. The Water segment’s revenues increased 7% (up 8% organically) year over year to $38.8 million. However, LPD revenues dropped 5% on a reported basis (down 2% organically) to $29.2 million. Revenues in the Other segment fell 40.6% on a reported basis to $4.8 million.
Margins
Gross profit in the first quarter rose 8.9% to $542.9 million. Gross margin expanded 70 basis points (bps) to 60.3%.
Sales and marketing expenses rose 11.7% to $147.8 million, while general and administrative expenses dropped 10.1% to $70.1 million. Research and development expenses rose 11.2% to $44.7 million.
Overall, operating profit in the reported quarter was $280.4 million, up 12.9% year over year. The operating margin in the quarter expanded 146 bps to 31.1%.
Financial Position
IDEXX exited first-quarter 2023 with cash and cash equivalents of $111.4 million compared with $112.5 million recorded at the end of fourth-quarter 2022. Total debt (including the current portion) at the end of the first quarter of 2023 was $771.3 million compared with a total debt of $769.4 million at the end of fourth-quarter 2022.
Cumulative net cash provided by operating activities at the end of the first quarter of 2023 was $183.9 million compared with $114.7 million a year ago.
2023 Guidance
The company updated its full-year 2023 outlook.
For 2023, the company expects revenue growth in the range of $3.615-$3,700, indicating growth of 7.5-10% on a reported and organic basis (up from the previous guidance of $3,590-$3,690 million). The Zacks Consensus Estimate for the same is currently pegged at $3.63 billion.
IDEXX’s full-year earnings per share guidance is now pegged in the range of $9.33-$9.75, indicating a rise of 16-21% on a reported basis (up from the previous guidance of $9.27-$9.75). The Zacks Consensus Estimate for full-year earnings per share is currently pegged at $9.61.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Idexx has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Idexx has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Idexx belongs to the Zacks Medical - Instruments industry. Another stock from the same industry, Intuitive Surgical, Inc. (ISRG), has gained 0.9% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.
Intuitive Surgical, Inc. reported revenues of $1.7 billion in the last reported quarter, representing a year-over-year change of +14%. EPS of $1.23 for the same period compares with $1.13 a year ago.
Intuitive Surgical, Inc. is expected to post earnings of $1.32 per share for the current quarter, representing a year-over-year change of +15.8%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.6%.
Intuitive Surgical, Inc. has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
IDEXX Laboratories, Inc. (IDXX) : Free Stock Analysis Report
Intuitive Surgical, Inc. (ISRG) : Free Stock Analysis Report