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IDEXX Laboratories Inc IDXX

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Morningstar’s Analysis

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COVID-19 Has Yet to Put a Leash on Idexx; Raising Our FVE

Debbie S. Wang Senior Equity Analyst

Analyst Note

| Debbie S. Wang |

Narrow-moat Idexx’s barn-burning performance in the third quarter was stunning, and we’re raising our fair value estimate to $217 per share, after adjusting our assumptions for the full year, as well as incorporating more optimistic expectations for the rest of our explicit forecast period. Though a number of med-tech companies have commented on the rapidity of recovery off the nadir last spring during shelter-in-place orders, we think Idexx may take the cake on this dimension. Consolidated quarterly revenue rose 18% organically year over year, fueled by 21% organic growth in the companion animal segment (which accounts for over 85% of total revenue). This boom on the topline translated into quarterly earnings rising 34%. We suspect the outsized effect on the bottomline was driven by the 24% increase in reference lab services—a category that offers significant operating leverage as test volume rises. Nevertheless, shares remain massively overvalued, from our perspective.

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Company Profile

Business Description

Idexx Laboratories primarily develops, manufactures, and distributes diagnostic products, equipment, and services for pets and livestock. Its key product lines include single-use canine and feline test kits that veterinarians can employ in the office, benchtop chemistry and hematology analyzers for test-panel analysis on-site, reference lab services, and tests to detect and manage disease in livestock. Idexx gets about 38% of its revenue from outside the United States.

One IDEXX Drive
Westbrook, ME, 04092
T +1 207 556-0300
Sector Healthcare
Industry Diagnostics & Research
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Aggressive Growth
Employees 9,200