IDEXX Laboratories Poised on Strong CAG Growth Globally

Zacks

On Oct 7, 2014, we updated our research report on IDEXX Laboratories, Inc. (IDXX) – developer, manufacturer and distributer of products and services primarily for the companion animal veterinary, livestock and poultry, water testing and dairy markets.

IDEXX reported strong second-quarter 2014 results with both the top and the bottom line steering ahead of the respective Zacks Consensus Estimate.Earnings per share of $1.10 were up 11.1% year over year, beating the Zacks Consensus Estimate by 4 cents. Likewise, revenues of $390.1 million increased 10.6% and surpassed the Zacks Consensus Estimate of $386 million.

The year-over-year growth at both fronts is indicative of the company’s consistent growth via organic means.We are, at the same time, encouraged by the global performance of the company during the second quarter. In addition, it is also benefiting from the go-direct strategy within its organic business. Backed by a strong and consistent Companion Animal Group (CAG) performance in the quarter, IDEXX once again raised its fiscal 2014 revenue outlook.

Bolstered by a strong cash position, the company remains committed to delivering incremental returns to investors, thereby leveraging earnings power. In the last reported quarter, IDEXX bought back approximately 973,000 shares for $126 million and authorized a repurchase of 5 million additional shares, over and above the 1.4 million already remaining from the company’s previous authorization.

However, dependence on third party distributors remains as an overhang. Further, intense competition and currency fluctuations warrant caution.

IDEXX currently carries a Zacks Rank #3 (Hold).

Key Picks in the Sector

However, investors interested in the medical instrument sector may consider stocks like Edwards Lifesciences Corp. (EW), Hologic Inc. (HOLX) and Hansen Medical, Inc. (HNSN). All three carry a Zacks Rank #2 (Buy).

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