It has been about a month since the last earnings report for Idexx Laboratories (IDXX). Shares have lost about 5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Idexx due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
IDEXX Laboratories posted fourth-quarter 2024 earnings per share (EPS) of $2.62, up 12.9% year over year. The figure surpassed the Zacks Consensus Estimate by 9.1%.
Comparable constant-currency EPS of $2.53 improved 10% year over year.
Full-year 2024 earnings of $10.67 rose 6.1% from the 2023 level. The figure exceeded the Zacks Consensus Estimate by 2.1%.
Quarterly revenues increased 5.8% year over year (up 6% organically) to $954.3 million. The reported figure topped the Zacks Consensus Estimate by 1.9%.
The year-over-year upside was primarily driven by Companion Animal Group ("CAG") growth of 6% as reported and organically.
Veterinary software, services and diagnostic imaging systems’ revenues increased 13% on a reported basis and 7% organically.
Full-year total revenues of $3.90 billion improved 6% on a reported basis as well as organically from the 2023 level, driven by 10% reported and 10.5% organic growth in CAG Diagnostics recurring revenues. The figure beat the Zacks Consensus Estimate by a close margin of 0.5%.
IDEXX derives revenues from four operating segments — CAG, Water, Livestock, Poultry and Dairy (“LPD”), and Other.
CAG revenues rose 6% year over year on a reported basis and on an organic basis to $870.5 million.
CAG Diagnostics’ recurring revenues also increased 6% on a reported basis and 7% organically, reflecting double-digit IDEXX VetLab consumable gains, and solid reference laboratory and consulting services growth.
The Water segment’s revenues increased 8% year over year on a reported and 9% on an organic basis to $45.2 million.
For the fourth quarter, LPD revenues increased 5% reportedly and 7% on an organic basis to $34.6 million.
Revenues from the Other segment decreased 28.6% on a reported basis to $4.1 million.
The gross profit rose 8.5% to $570.7 million. The gross margin expanded 144 basis points (bps) to 59.8% despite a 2.2% rise in the cost of revenues.
Sales and marketing expenses rose 5.7% to $150 million. G&A expenses surged 16.9% to $102 million. R&D expenses jumped 11.4% to $57.7 million. The operating profit in the reported quarter rose 6.4% year over year to $261.1 million. The operating margin in the quarter expanded 15 bps to 27.4%.
IDEXX exited the fourth quarter with cash and cash equivalents of $288.3 million compared with $453.9 million at the end of 2023. Total debt (including the current portion) was $617.6 million compared with $697.9 million at the end of 2023.
The cumulative net cash provided by operating activities at the end of the fourth quarter was $929 million compared with $906.5 million in the prior-year period.
IDEXX’s 2025 outlook assumes approximately 1.5 billion of share repurchases, subject to market conditions, which is equivalent to nearly 4% of current equity market capitalization.
Total revenues for 2025 are expected to be in the range of $4,055-$4,170 million, suggesting growth of 4-7% on a reported basis and 6-9% on an organic basis. The Zacks Consensus Estimate is currently pegged at $4.16 billion.
IDEXX expects full-year EPS to be in the range of $11.74-$12.24, indicating reported growth of 10-15%. The Zacks Consensus Estimate for full-year EPS is currently pegged at $11.95.
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -5.47% due to these changes.
At this time, Idexx has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Idexx has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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This article originally published on Zacks Investment Research (zacks.com).
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