IDEXX (IDXX) to Report Q3 Earnings: What's in the Cards?

IDEXX Laboratories, Inc. IDXX is slated to report third-quarter 2021 results on Nov 2, before market open.

In the last-reported quarter, the company’s earnings per share of $2.34 surpassed the Zacks Consensus Estimate by 16.4%. Moreover, earnings outpaced the consensus estimate in the trailing four quarters, the average beat being 28.16%.

Let’s take a look at how things have shaped up prior to this announcement.

Factors at Play

The Companion Animal Group (CAG) business is expected to have gained from consistent and healthy organic revenue growth in the to-be-reported quarter, backed by strong organic CAG diagnostics recurring revenue growth in the United States and internationally. Robust growth in the U.S. clinical business is likely to have contributed to U.S. CAG Diagnostic recurring revenue gains. In its earnings call for the second quarter, the company noted that U.S. clinical visit growth surged 13%, with strength across nonwellness and wellness visit categories. The CAG arm is also likely to gain from organic growth in CAG diagnostic instrument revenues, as it did in the prior quarter.

IDEXX Laboratories, Inc. Price and EPS Surprise

IDEXX Laboratories, Inc. Price and EPS Surprise

IDEXX Laboratories, Inc. price-eps-surprise | IDEXX Laboratories, Inc. Quote

We expect to see significant growth in IDEXX’s global catalyst installed base in the third quarter on new instrument placements and high customer retention levels, as experienced in the prior quarter. Notably, total premium placements in the second quarter totaled 3,756 units, double the placements recorded in the previous year. The company also recorded 571 second catalyst placements on continued strong demand from high-volume customers in the prior quarter. Further, the company achieved 1,119 premium hematology placements (including hundreds of ProCyte One installs), which supported 11% year-over-year growth in its global premium hematology installed base. In the third quarter, despite the emergence of the new and more lethal Delta variant of COVID-19, the overall opening up of the economy is unabated. Under such a situation, we expect the company to have recognized strong market demand leading to high instrument placements. These developments are likely to have driven the third-quarter top line.

The ezyVet acquisition, completed in June, expanded IDEXX’s cloud-based software capability and is expected to have fueled growth in the CAG arm. The company’s veterinary software and diagnostic are also expected to report strong growth for the third quarter on imaging revenue gains, similar to the prior quarter, with initial benefits from the recent ezyVet buyout.

The Zacks Consensus Estimate for CAG revenues is pegged at $704 million, suggesting an improvement of 10.3% from the year-ago quarter’s reported figure.

IDEXX’s Water business is expected to report impressive revenue performance for the to-be-reported quarter. As economies reopen, the ongoing recovery in Water Testing demand (including recovery in noncompliance-related testing volumes, which were more constrained during the pandemic) is likely to drive growth, as it did in the previous quarter.

The Zacks Consensus Estimate for Water revenues is pegged at $35.6 million, suggesting a rise of 6.9% from the year-ago quarter’s reported figure.

Within the Livestock, Poultry and Dairy (LPD) arm, we expect revenue growth to be impacted by reduced demand in key areas such as African swine fever testing. During the second quarter, revenue growth in the LPD arm was hampered by relatively lower herd health screening levels owing to reduced exports, particularly from restrictions on live animal imports into China. These trends are expected to have continued in the third quarter, affecting the top line. The company has subsequently slashed its revenue expectations for the LPD arm for the second half of 2021.

The Zacks Consensus Estimate for LPD revenues is pegged at $35.6 million, suggesting a fall of 3.5% from the last-reported quarter figure.

What Our Model Suggests

Our proven model predicts an earnings beat for IDEXX this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.

Earnings ESP: The company has an Earnings ESP of +2.77%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #3.

Stocks Worth a Look

Here are a few stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle.

Becton, Dickinson and Company BDX has an Earnings ESP of +2.62% and a Zacks Rank of 2. The company will release fourth-quarter fiscal 2021 results on Nov 4. You can see the complete list of today’s Zacks #1 Rank stocks here.

Insulet Corporation PODD has an Earnings ESP of +15.79% and a Zacks Rank of 2. The company is scheduled to release third-quarter 2021 results on Nov 4.

Vertex Pharmaceuticals Incorporated VRTX has an Earnings ESP of +10.62% and a Zacks Rank of 2. The company will report third-quarter 2021 results on Nov 2.

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