Why is Idexx (IDXX) up 5% since its last earnings report?

It’s been about a month since Idexx Laboratories (IDXX) last reported earnings. Shares have risen about 5% in that time, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Idexx headed for a recession? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the company’s most recent earnings report in order to better understand the important catalysts.

Best IDEXX Earnings Estimates for Q1, 2024. View Discounts

IDEXX Laboratories, Inc. reported first-quarter 2024 earnings per share of $2.81, up 10.2% year-over-year. This number surpassed the Zacks Consensus Estimate by 4.9%.

In Q1 2024, comparable constant-currency EPS of $2.71 increased 8.8% year-over-year.

Revenues in detail

First quarter revenue increased 7.1% year over year (7% organically) to $964.1 million. However, this figure missed the Zacks Consensus Estimate by 0.1%.

Year-over-year growth was primarily driven by Companion Animal Group’s (“CAG”) reported 7% organic revenue growth.

CAG Diagnostics’ recurring revenue increased 7% on a reported and organic basis, supported by sustained benefits from IDEXX execution drivers. 8% global growth in premium instrument deployment and continued strong customer retention contributed to 11% year-over-year growth in IDEXX’s global installed base of premium instruments.

Veterinary diagnostic software, services and imaging systems revenues increased 12% on a reported basis and 8% on an organic basis, reflecting strong, recurring revenue growth and continued growth in cloud software deployments.

Segment analysis

IDEXX derives revenue from four operating segments – CAG, Water, Livestock, Poultry and dairy products (“LPD”) i Other.

In the first quarter, CAG revenues increased 7% on a reported and organic basis year over year to $889.3 million. Water segment revenues increased by 11% (the same organically) year over year, to USD 43.1 million.

In the first quarter, LPD revenues decreased 3% on a reported and organic basis to USD 28.2 million. Revenues from the Other segment decreased by 26.8% on a reported basis to USD 3.5 million.

Margins

First-quarter gross profit increased 9.2% to $593.1 million. Gross margin increased by 120 basis points (bps) to 61.5% despite a 3.9% increase in cost of revenues.

Sales and marketing expenses increased 1.1% to $149 million, while general and administrative expenses increased 31.3% to $92 million. Research and development expenses increased 17.8% to $52.6 million. Overall operating profit for the reported quarter was $298.9 million, up 6.6% year-over-year. However, operating margin fell 14 basis points to 31% in the quarter.

The story continues

Financial position

IDEXX ended the first quarter with cash and cash equivalents of $397.4 million compared to $453.9 million at the end of 2023. Total debt (including current portion) was $695.8 million compared to $697.9 million USD at the end of 2023

Cumulative net cash flow from operating activities was $198.6 million compared to $183.9 million in the comparable prior-year period.

Guidelines 2024

IDEXX has provided an updated forecast for 2024.

The company expects total revenue in the range of $3.895-$3.965 billion (previously $3.930-$4.040 billion). This suggests an increase of 6.5%-8.5% (previously 7.5%-10.5%) on a reported basis and 7% (previously 7) on an organic basis. The Zacks Consensus Estimate is currently at $3.99 billion.

IDEXX estimated full-year EPS of $10.82-$11.20 (previously $10.84-$11.33). This updated guidance shows the increase recorded was 8 (previously 8). The Zacks Consensus Estimate is currently calling for full-year EPS of $11.13.

How have estimates changed since then?

Last month, investors saw a downward trend in new estimates.

VGM results

At this point, Idexx has a great Growth Score of A, although it lags slightly behind its Momentum Score with a B. However, the stock is rated D on the value side, ranking in the bottom 40% for this investment strategy.

Overall, the stock has a Total VGM Score of B. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for this company are generally on a downward trend, and the magnitude of these revisions indicates a downward shift. No wonder Idexx has a Zacks Rank #4 (Sell). We expect a below-average rate of return on stocks in the coming months.

Industry player performance

Idexx belongs to the Zacks Medical – Instruments industry. Another stock in the same industry, Edwards Lifesciences (EW), has gained 3.3% over the past month. More than a month has passed since the company announced its results for the quarter ended March 2024.

In the most recent quarter, Edwards Lifesciences reported revenue of $1.6 billion, representing a year-over-year change of +9.5%. EPS of $0.66 for the same period compared to $0.62 a year ago.

For the current quarter, Edwards Lifesciences is expected to report earnings per share of $0.70, representing a change of +6.1% from the prior-year quarter. The Zacks Consensus Estimate has changed +0% over the past 30 days.

The overall direction and magnitude of estimate revisions translates into a Zacks Rank #3 (Hold) for Edwards Lifesciences. The stock also has a VGM Rating of D.

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