Why Is Qiagen (QGEN) Down 0.7% Since Last Earnings Report?

A month has gone by since the last earnings report for Qiagen (QGEN). Shares have lost about 0.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Qiagen due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

QIAGEN Q1 Earnings Beat Estimates, 2021 Guidance Up

QIAGEN’s first-quarter 2021 adjusted earnings per share were 66 cents, up 94.1% year over year (up 91% at CER). Moreover, the figure surpassed the Zacks Consensus Estimate by 4.8%.

Notably, the bottom line exceeded the company’s first-quarter outlook of 60-62 cents at CER, announced on Feb 9, 2021.

The adjustment excludes the impact of certain non-recurring items like business integration, acquisition, restructuring-related expenses, and purchased intangibles amortization expenses, among others.

GAAP earnings per share for the quarter was 56 cents per share, improving significantly from the year-ago growth per share of 17 cents, reflecting an uptick of 229.4%.

Revenues in Detail

Net sales in the first quarter rose 52.4% on a year-over-year basis to $567.2 million (up 48% at CER). Also, the top line exceeded the Zacks Consensus Estimate by 2.1%. Top-line growth also exceeded the company’s first-quarter expectation of at least 45% growth at CER.

Robust sales were recorded on improvements in non-COVID areas of the portfolio and strong demand for product groups addressing the critical demand for COVID-19 testing.

Geographical Revenue Update

In the quarter under review, sales from the Americas (43% of sales) totaled $244 million, up 41% on a reported basis (up 41% at CER).

Revenues from Europe, Middle East and Africa (39% of sales) rose 70% reportedly (up 60% at CER) to $219 million.

Further, revenues from Asia-Pacific/Japan (18% of sales) rose 51% year over year on a reported basis (up 44% at CER) to $104 million.

Segmental Details

As of the first quarter of 2021, QIAGEN had two major customer classes – Molecular Diagnostics and Life Sciences.

Molecular Diagnostics (representing 49% of net sales) revenues were up 59% on a reported basis (up 54% at CER) to $279 million.

Life Sciences (51% of total revenues) reported revenues of $288 million, up 47% on a reported basis (up 42% at CER).

Operational Update

Adjusted gross profit in the quarter under review rose 50.1% to $388.2 million. However, adjusted gross margin contracted 107 basis points (bps) to 68.5% due to a 57.8% rise in adjusted cost of revenues (adjusting for acquisition-related intangible amortization) to $178.9 million.

Sales and marketing expenses of QIAGEN rose 18.8% to $113.8 million year over year. Research and development expenses increased 8.3% year over year to $47.4 million whereas general and administrative expenses rose 19.9% year over year to $33.8 million.

Adjusted operating income (excluding items like acquisition-related intangible amortization, restructuring and integration, asset impairment) rose 112.6% year over year to $193.2 million in the first quarter. Adjusted operating margin expanded 964 bps to 34.1%.

Financial Update

QIAGEN exited first-quarter 2021 with cash and cash equivalents, and short-term investments of $791.7 million, up from $715.2 million at the end of fourth-quarter 2020. Long-term debt was $1.93 billion in first-quarter 2021 compared with $1.88 billion in the last reported quarter.

Cumulative net cash flow from operating activities at the end of first-quarter 2021 was $128.6 million compared with $15.9 million a year ago, reflecting a surge of 708%.

Outlook

QIAGEN is upbeat about its progress over the past year and has accordingly reaffirmed its 2021 outlook, which was issued on Dec 8, 2020.

The company reaffirmed its expectation for full-year sales growth at around 18-20% at CER.    The Zacks Consensus Estimate for full-year revenues is pegged at $2.25 billion.

For 2021, the company expects adjusted earnings per share in the range of $2.42-$2.46 at CER. The Zacks Consensus Estimate for full-year adjusted earnings per share is pegged at $2.50.

The company has also provided its second-quarter 2021 expectations.

Second-quarter net sales are expected to grow at least 20% at CER from $443.3 million in the same period of 2020. The Zacks Consensus Estimate for first-quarter revenues is pegged at $555.3 million.

Adjusted earnings per share is expected in the range of 62-64 cents at CER versus 55 cents in the year-ago quarter. The Zacks Consensus Estimate for first-quarter adjusted earnings per share is pegged at 63 cents.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

VGM Scores

Currently, Qiagen has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, Qiagen has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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