Abaxis' Product Line Expansion Aids Growth, Rivalry Rife

On Jan 10, we issued an updated research report on Abaxis, Inc. ABAX. The stock carries a Zacks Rank #3 (Hold).

This manufacturer of portable Medical (human) and Veterinary (animal) blood analysis systems, providing clinicians with rapid blood constituent measurements in medical and veterinarian markets globally, has outperformed the broader industry in the last three months. The stock has returned 35.7% compared with the industry’s 5.5% gain.

 

 

We are encouraged by the company’s strong performance in Veterinary consumables with contributions from hematology reagents, i-STAT cartridges, coagulation cartridges and rapid assays. Notably, Hematology reagent revenue performance was solid in North America and stronger in the markets outside the continent. We are also upbeat about the company witnessing an increase in sales of hematology instruments worldwide.

Solid global sales of Piccolo instruments are also encouraging for Abaxis. Per management, as healthcare delivery consolidates across the United States into these groups, networks and healthcare conglomerates, Abaxis’ Piccolo is perfectly positioned to capture the lion’s share of diagnostic tests market.

We are also upbeat about Abaxis expanding its portfolio of rapid test menu of late. The company had signed a partnership with the American Animal Hospital Association to develop a wellness testing initiative for improving veterinary blood work compliance and implementing preventive care. We believe, a successful product portfolio expansion will boost the company’s top line and help foray into new regions. Moreover, the company plans additional product launches in fiscal 2018 including the VetScan FUSE connectivity system.

Meanwhile, the company’s new sales and marketing strategies have been boosting investor confidence. Accordingly, last September, Abaxis had started shipping VetScan UA, a urine chemistry analyzer.

On the flip side, Abaxis faces intense competition in both the Medical and Veterinary markets. The company competes against firms that have substantially greater resources on all fronts — financial, research and development (R&D) plus operations and marketing. It contend with primarily with commercial clinical laboratories, hospital clinical laboratories as well as manufacturers of benchtop multi-test blood analyzers and other testing systems that health care providers can use on-site. Also, currency headwinds and contracting margins are other concerns.

Key Picks

Some better-ranked stocks in the broader medical space are Bio-Rad Laboratories BIO, Centene Corporation CNC and Molina Healthcare Inc. MOH, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Bio-Rad has a whopping expected growth rate of 141.5% for the first quarter of 2018. Over a year, the stock has jumped 35%, surpassing the broader industry.

Centene has an expected long-term growth rate of 14%. The stock’s performance on the bourses has been solid in a year’s time with a high return of 70.4%.

For 2018, Molina Healthcare has a solid projected growth rate of 178.6%. In the last three months, the stock has surged 37.8%, higher than the broader industry’s rally of 17.9%.

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