Westbrook, Maine-based IDEXX Laboratories, Inc. was founded in 1983. It focuses on manufacturing, developing and marketing products and services targeting the veterinary, livestock, animal companion, diagnostic products, consulting services, dairy and water testing markets. Investing in the medical diagnostics and veterinary clinic markets may not sound glamorous, but some analysts expect the sector could grow exponentially in the next 5 to 10 years, although weakness might be seen in the livestock industry because of growing interest in plant-based diets. Keep reading if you’ve considered investing in IDEXX Laboratories Inc. (NASDAQ: IDXX) or trading IDXX stock for short-term gains.
How to Buy IDEXX Laboratories (IDXX) Stock
Buying IDXX shares is much like buying stock in any other large-capitalization listed stock. Before you decide to invest or begin trading in IDXX stock, however, you should know a few things about that company and how to buy stocks in general.
Since IDXX stock trades on the Nasdaq exchange, purchasing the company’s shares should be no different than buying shares in any other company listed on a major U.S. stock exchange, so most stockbrokers should be able to handle that transaction. A list of the steps you need to take to purchase IDXX stock appears below.
Step 1: Pick a brokerage.
Buying stock through an online stock brokerage would be the most efficient way to acquire shares in IDXX stock. Until relatively recently, you had to pay a fee or commission on every stock purchase, although most major online stockbrokers and discount brokers now offer commission-free stock trading.
If you don’t already have an account with a stockbroker, opening an account at an online broker is relatively easy. Some stockbrokers do not require a minimum deposit to open an account, and they may even provide a demo or paper trading account for you to practice in and assess the broker’s services with.
Step 2: Decide how many shares you want.
The number of IDXX shares you buy depends on your trading strategy and the amount of capital in your account. For example, if you have $100,000 to invest, you can buy approximately 200 shares of IDXX at its current price of around $500.00 per share.
Step 3: Choose your order type.
Not all order types are supported by every broker, so you should check that your broker supports your preferred types before opening an account and placing an order. The following order types make up the majority of all orders placed and executed in the stock market.
Limit orders involve specifying the price at which you want the order filled. They are either day orders or good ‘til canceled (GTC). You can also buy at the market with a market order, which will give you the best price available at the time. Once you have initiated a position, you can then place a stop-loss order, a trailing stop order or a limit order to close out positions.
Step 4: Execute your trade.
After you’ve placed an order for IDXX stock, your broker has the responsibility of entering the order into the stock market and executing it on your behalf and according to your instructions.
Where to Buy IDXX
Once you’ve opened a stock brokerage account, you would generally be able to buy IDXX shares on the Nasdaq exchange. For a quick comparison of the best brokers for buying stocks like IDXX, Benzinga has compiled the table below.
- Best For:Active and Global TradersSecurely through Interactive Brokers’ website
- Best For:Traders of All Levelssecurely through Moomoo's website
- Best For:Mobile Userssecurely through Plus500's website
- Best For:Momentum traderssecurely through Centerpoint Securities's website
- Best For:Intermediate Traders and Investorssecurely through Webull's app
IDXX Stock History and Value
IDEXX Laboratories' principal business falls into the healthcare equipment industry segment, but the company also develops, manufactures and distributes veterinary products and services. The company has four divisions:
- Companion Animal Group (CAG) Division: Provides products and services for the veterinary and bioanalytics markets, including diagnostic and health monitoring, etc.
- Livestock and Poultry (LPD) Division: Provides products and services aimed at the livestock and poultry industry.
- Water Division: Designs, manufactures and distributes devices for the detection of microbiological parameters in water, including assay test kits, etc.
- Other: This division focuses on the human point-of-sale diagnostic market and the company’s out-licensing agreements, like blood gas analyzers, biological materials testing, etc.
Some of IDEXX Laboratories’ products. Source: IDEXX.
IDEXX Laboratories’ companion animal business has also benefited significantly from the COVID-19 pandemic since many people stayed home with their pets and some even acquired new companion animals. The company’s Water and Other divisions also picked up business from the pandemic.
Those boosts to IDEXX’s business were reflected in the company’s stock price over the last two years. Because of these factors, IDXX stock rallied significantly since the onset of the pandemic, although it recently came under pressure as COVID-19 mandates were withdrawn around the world.
The company reported its 2021 fourth quarter and full-year results on Feb. 2, 2022, showing diluted earnings of $1.89 for 2021’s fourth quarter, compared to an analyst consensus of $1.72. Revenue for the quarter increased by +11.1% compared to 2020’s fourth quarter, while full-year 2020 diluted earnings came to $8.61 per share.
IDEXX expects earnings to grow by +14.92% in 2022, with full-year earnings estimated at $9.45 to $10.86 per share. The next earnings report is expected on May 3, 2022, based on last year’s reporting date.
Trading in IDXX stock has also been extremely volatile since March 2020 when the stock traded at the $168.65 level per share.
As the price chart below shows, IDXX stock tripled in price from the spring of 2020 to the summer of 2021. It has since declined substantially from its peak of $706.95 per share seen in July 2021 to currently trade just above the psychological $500 level.
IDXX: What Analysts Are Saying
Some analysts expect that the eventual end of the COVID-19 pandemic could adversely affect IDEXX Laboratories’ business and stock price, which has in part prompted the stock’s recent price drop. Technical analysts also typically think IDXX stock should be avoided for the time being since it has been correcting lower since July 2021.
Furthermore, some analysts who base their valuations on historical multiples and past business growth think that IDXX stock is overvalued at its current level. For example, they might point to the fact that the stock trades at a price/earnings (PE) ratio of 59.03 with a price/book ratio of 62.47. Both of these metrics show the stock is overvalued compared to the company’s peers in the industry, which have PE ratios on average of 35 to 40.
While overvalued stocks may still perform well in the near term and maintain a high market capitalization, their future returns are likely to be limited. Despite that, other respected analysts consider the stock to be attractive for other reasons, such as its underlying fundamentals. Examples of both a bear and bull analysis scenario for this stock are summarized below.
Charles Schwab’s MarketEdge Bear Case on Weak Technicals
According to MarketEdge, the current technical condition of IDXX stock shows considerable weakness and could be susceptible to declining further. MarketEdge downgraded the stock from Neutral to Avoid on Jan. 10, 2022 when the stock was trading at $550.30 per share and has since declined by -6.4%.
The IDXX price chart indicates the stock could be in a strong downward trend. While momentum as measured by the nine-day relative strength index (RSI) shows some strength, momentum has begun to taper off.
MarketEdge also notes that the stock currently trades below both its 50-day and its 200-day moving average. With the exception of the 10-day moving average, the 21-day, 50-day and 200-day moving averages all indicate further downside for the stock.
Atlantic Securities’ Bull Case on Future Growth
Atlantic Securities initiated coverage of IDXX stock on Feb. 8, 2022. In their report, the brokerage set an overweight rating on the stock with a price target of $650 per share, indicating a potential upside of +25% from its current price.
An overweight rating means that the analyst expects the stock to perform positively and deserves a larger position within portfolios other than those given by specific benchmarks.
The reason Atlantic Securities and other large institutional investors have issued a buy on IDXX stock is because of the expectation of further growth in the company’s CAG, LPD and Water divisions. Other major stock analysts who believe IDXX stock could appreciate include those at Morgan Stanley (NYSE: MS), JPMorgan Chase & Co. (NYSE: JPM) and Barclays Capital.
Pros and Cons of IDXX Stock
The advantages and disadvantages of buying IDXX stock can be found below:
- A positive recent earnings report
- Optimistic analyst future growth expectations
- Well-positioned in an expanding industry
- High stock price
- No dividend
- Weak technicals
Is IDXX a Buy, Sell or Hold?
Based on technical analysis, IDXX stock is a sell on rallies. After making a double top in July and August of 2021, the stock’s price has broken its prior uptrend and is currently trading below its 200-day moving average and the 38.2% Fibonacci retracement level of its prior uptrend. The stock has also underperformed the S&P 500 index over the last 2 months.
With respect to fundamentals, IDXX stock remains somewhat overvalued and trades at a high PE ratio relative to other stocks in its industry. While the IDXX stock price could increase in the longer term, it has already gone up significantly in the past two years, and that move was clearly overdone given the recent correction.
The stock thus has a greater likelihood of declining in the near term than rising. Longer term, the company may evolve to take advantage of other income sources that suggest the possibility of enhanced future growth. Still, the company’s current involvement in offering products and services to the animal agriculture industry may hurt its future prospects because of the rising interest in healthier plant-based diets that largely exclude animal products.
Frequently Asked Questions
Does IDEXX Laboratories provide products outside the United States?
Yes, IDEXX Laboratories offers its products in 175 countries worldwide.
Does IDEXX Laboratories supply products or services to the animal agriculture industry?
Yes, the company has an entire division that provides products and services aimed at the livestock and poultry industry.
About Jay and Julie Hawk
During her financial career, Julie developed world-class expertise in technical analysis, including Elliott Wave Theory, and was deeply involved in initiating research into automated trading and trading signal systems. As a member of the San Francisco Writers’ Guild, Julie regularly wrote trade strategies, educational material, market commentary, foreign exchange newsletters, reports, articles and press releases. In addition, Julie was interviewed for various financial markets magazines and news wires in her professional capacity as a forex and derivatives expert. Since retiring from working at banks, Julie has been writing and editing books and articles about financial markets for companies like Benzinga, as well as trading forex online and mentoring other traders as part of TheFXperts’ financial team.
In addition to trading stock index, forex and commodity futures and options professionally on exchange floors, Jay also has experience trading stocks and options for private investors and trading forex online for his own account. He has also developed extensive experience in performing and using fundamental economic and corporate analysis to inform his trading and investment activities. Jay is also an expert financial writer with particular expertise in reviewing online brokers and investor services.