Is There An Opportunity To Buy IDEXX Labs, The Animal Diagnostics-Focused Firm Stock After Q3 Performance? Analyst Answers

IDEXX Laboratories Inc IDXX reported Q3 FY23 sales of $915.53 million, missing the consensus of $926.76 million. Adjusted EPS was $2.50 versus the consensus of $2.37 and $2.15 a year ago.

The company reported an increase of 9% and 8% organic, driven by Companion Animal Group (CAG) growth of 9% reported and 8% organic and Water revenue growth of 9% reported and 7% organic. 

Veterinary software, services, and diagnostic imaging systems revenue grew 14% as reported and 13% organically, reflecting high recurring revenue growth and ongoing momentum in cloud-based software placements.

Guidance: IDEXX Laboratories raised its FY2023 EPS guidance from $9.64-$9.90 to $9.74-$9.90 versus the consensus of $9.82.

It lowered the FY23 sales guidance from $3.66 billion -$3.71 billion to $3.64 billion - $3.65 billion versus the consensus of $3.68 billion.

William Blair maintains that the veterinary healthcare sector remains a secure and attractive investment option for investors and is relatively resistant to economic downturns due to its essential nature, robust pricing capabilities, and favorable demographic trends. 

Furthermore, within this sector, Idexx stands out as a prominent leader, characterized by a robust financial position, a compelling free cash flow profile, strong return on invested capital metrics, and a predominantly recurring-revenue business model.

These attributes make Idexx an especially appealing investment choice, considering the existing macroeconomic uncertainties.

Price Action: IDXX shares are down 3.42% at $385.80 on the last check Wednesday.