IDEXX Labs (IDXX) Continues to Beat and Raise - Piper Jaffray

Piper Jaffray analyst, Kevin Ellich, raised estimates and his price target on IDEXX Labs (NASDAQ: IDXX) after earnings beat consensus and the company guided 206 higher. Currency headwinds made him a little more conservative on the coming year EPS growth so the price target increases less than projected earnings on a lower multiple.

Q4 revenue increased 14% y/y to $399.7M, which was $2.8M higher than consensus of $396.9M. Normalized organic revenue grew 11% driven by 12.5% normalized growth in recurring companion animal diagnostic sales and strong consumable growth. Adjusted EPS of $0.48 beat consensus by $0.06 and was aided by a $0.03 benefit from lower tax related to the federal R&D tax credit despite a $0.03 headwind from FX. Adjusted gross margin increased ~70 bps y/y to 54.47%, while operating margin moderated 60 bps to 16.74% .

IDXX produced 12.5% normalized growth in recurring companion animal growth (CAG) diagnostics revenue driven by 16% organic VetLab consumables growth driven by volume gains and 11% organic reference lab growth driven by 13% growth in the U.S. Normalized organic rapid assay revenue grew 9% due to higher 4Dx volumes.

FY16 EPS guidance was raised to $2.10 to $2.17 (from $2.09 to $2.16) and IDXX continues to expect organic revenue growth of 8-9% for the year despite a $25M decrease in revenue guidance to a range of $1,690-1,710M. Relative to previously issued guidance, FX is expected to have an incremental $25M impact on revenue and $0.04 impact on EPS.

FY16 increased and pushed the price target higher despite a lower multiple. The PT goes to $75 (from $73) based on 18x the FY17 EBITDA estimate of $419.2M. The firm maintained a Neutral rating.

For an analyst ratings summary and ratings history on IDEXX Laboratories click here. For more ratings news on IDEXX Laboratories click here.

Shares of IDEXX Laboratories closed at $70.14 yesterday.

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