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IDEXX's (IDXX) CAG Arm Grows Strong on Product Launches

Zacks Equity Research

On Apr 2, we issued an updated research report on IDEXX Laboratories, Inc. IDXX. The company’s robust worldwide commercial capabilities and best-in-class products, including the next-generation chemistry analyzer, Catalyst One, are key growth drivers for the days to come. The stock carries a Zacks Rank #3 (Hold), at present.

Over the past three months, this leading molecular diagnostic company has outperformed its industry. The stock has declined 8.6% compared with the 14.5% fall of the industry.

In fourth-quarter 2019, IDEXX registered 10.2% revenue growth on strong sales at the CAG business. The company also witnessed sturdy gains from global premium instrument installed base. We note that the Companion Animal market fundamentals are solid with tremendous global runway for growth.

Management’s innovation-based, multi-modality global strategy, enabled by enhanced commercial capability, fueled recurring CAG Diagnostics revenue growth. Expansion of strategic initiatives like IDEXX Preventive Care and the recent acquisition of Marshfield Labs have also contributed to this growth.

IDEXX Laboratories, Inc. Price

IDEXX Laboratories, Inc. Price

IDEXX Laboratories, Inc. price | IDEXX Laboratories, Inc. Quote

Of late, IDEXX has been steadily expanding the test menu with CAG. Recently, the company launched catalysts progesterone, which is off to a strong start globally. Apart from this, it registered strong placements of its recently-launched Cornerstone, Neo, Animana and Smart Flow systems in the December-end quarter. Incorporation of software systems, on the IDEXX 360 program is enhancing commercial efforts in North America.

However, economic stagnation due to the coronavirus outbreak are concerning. Meanwhile, a majority of IDEXX’s consolidated revenues is being derived from the sale of products in international markets. Thus, the strengthening of the U.S. dollar’s exchange rate, relative to other currencies, left a negative impact on the revenues derived in currencies other than the U.S. money as well as on profits drawn from products manufactured in the United States and sold internationally.

Key Picks

Some better-ranked stocks from the broader medical space are ResMed Inc. RMD, National Vision Holdings, Inc. EYE and Phibro Animal Health Corporation PAHC.

ResMed has a projected long-term earnings growth rate of 14.4%. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

National Vision’s long-term earnings growth rate is estimated at 10.7%. The company presently holds a Zacks Rank of 2.

Phibro’s long-term earnings growth rate is estimated at 2.1%. It currently flaunts a Zacks Rank #1.

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