A month has gone by since the last earnings report for Bio-Rad Laboratories (BIO). Shares have lost about 5.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Bio-Rad due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
BIO Q3 Earnings and Revenues Surpass Estimates
Bio-Rad posted third-quarter 2024 adjusted earnings per share (EPS) of $2.01, which beat the Zacks Consensus Estimate by 57%. However, the bottom line decreased 13.7% from the prior-year quarter’s level.
The quarter’s adjustments primarily eliminate the impacts of certain non-recurring items, such as the amortization of purchased intangibles, restructuring costs and losses from the change in the fair market value of equity securities.
The company’s GAAP EPS was $23.34, up 541.2% from the year-ago figure of $3.64.
Revenues in Detail
Revenues of $649.7 million surpassed the Zacks Consensus Estimate by 2%. The figure also increased 2.8% year over year (up 3.4% at constant exchange rate or CER).
Segmental Analysis
Sales in the Life Science segment totaled $260.9 million, down 1% year over year and 0.6% at CER. The currency-neutral year-over-year sales decline was broad-based. It was primarily due to weakness in the biotech and biopharma end markets.
Net sales in the Clinical Diagnostics segment totaled $388.8 million, up 5.6% on a year-over-year basis and 6.4% at CER. Increased demand for quality control products and a favorable comparison for immunology products, which were adversely impacted by supply constraints in the third quarter of 2023, primarily drove the currency-neutral year-over-year sales increase.
Margins
In the quarter under review, Bio-Rad’s gross profit rose 6% to $355.9 million. The gross margin expanded 167 basis points (bps) to 54.8%.
Operating expenses amounted to $291.4 million, up 19.1% year over year. Operating profit totaled $64.5 million, down 29.1% from the prior-year level. The operating margin contracted 447 bps to 9.9%.
BIO's Financial Update
Bio-Rad exited the third quarter of 2024 with cash and cash equivalents (including short-term investments) of $1.63 billion compared with $1.62 billion at the end of the second quarter of 2024. Total debt (including current maturities) at the end of the third quarter was $1.20 billion, which remained flat sequentially.
Cumulative net cash flow from operating activities totaled $331 million compared with the year-ago figure of $293.9 million.
2024 Guidance
Bio-Rad maintained its revenue guidance for full-year 2024.
The company still anticipates non-GAAP currency-neutral revenues to decline 2.5% to 4%. The Zacks Consensus Estimate for revenues is pegged at $2.58 billion, implying a 3.4% decline from the 2023 reported figure.
The adjusted operating margin for the full year is now projected to be in the range of 12.7-13.2% (up from the earlier guidance of 12-13%).
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, Bio-Rad has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Bio-Rad has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Bio-Rad belongs to the Zacks Medical - Products industry. Another stock from the same industry, Royal Philips (PHG), has gained 3.6% over the past month. More than a month has passed since the company reported results for the quarter ended September 2024.
Philips reported revenues of $4.81 billion in the last reported quarter, representing a year-over-year change of -1.1%. EPS of $0.35 for the same period compares with $0.36 a year ago.
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