A month has gone by since the last earnings report for Techne (TECH). Shares have added about 2.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Techne due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Bio-Techne Tops Q1 Earnings and Revenue Estimates
Bio-Techne reported first-quarter fiscal 2025 adjusted earnings per share of 42 cents, which exceeded the Zacks Consensus Estimate by 10.5%. The company also exceeded the year-ago period figure by a penny.
The quarter's adjustments eliminated the impact of certain one-time items, including amortization of intangibles, amortization of Wilson Wolf intangible assets and acquired inventory and restructuring and restructuring-related costs among others.
GAAP earnings per share was 21 cents compared with 31 cents in the prior-year quarter.
Q1 Revenues in Detail
Bio-Techne registered net sales of $289.5 million in the reported quarter, up 5% year over year on a reported basis and 4% on an organic basis. The figure also topped the Zacks Consensus Estimate by 3.1%.
Quarter in Details
The company reports under two business segments — Protein Sciences and Diagnostics and Genomics.
Within Protein Sciences, Bio-Techne recorded revenues of $204.5 million, flat year over year (up 1% organically). As of Dec. 31, 2023, a business within the Protein Sciences Segment met the criteria as held-for-sale. This business has been excluded from the segment's fiscal 2025 operating results. This exclusion reduced total sales by 1%.
Within Diagnostics and Genomics, sales improved 14% to $72.8 million (up 14% organically as well) in the fiscal first quarter.
Margin Trend
In the reported quarter, Bio-Techne’s gross profit edged down 1.2% to $183 million. Gross margin contracted 364 basis points (bps) to 63.2% on a 16% rise in cost of sales.
Selling, general and administrative expenses escalated 13.1% to $119.2 million. Research and development expenses totaled $23.8 million, down 0.5% year over year. Total operating expenses were $143 million, up 10.6% from the prior-year quarter.
Operating margin contracted a huge 635 bps to 13.8% in the reported quarter.
Protein Sciences segment's operating margin of 39.4% contracted 380 bps in the first quarter of fiscal 2025 primarily due to product mix and reinstatement of incentive compensation accruals. The Diagnostics and Spatial Biology segment's operating margin was 5.1% in the first quarter of fiscal 2025, reflecting a 440 bps expansion year over year. The segment's operating margin increased due to volume leverage and productivity initiatives, partially offset by the reinstatement of incentive compensation accruals.
Capital Structure
Bio-Techne exited the fiscal first quarter with cash and equivalents and short-term available-for-sale investments of $187.5 million compared with $152.9 million at the end of fiscal 2024. Long-term debt obligations were $300 million at the end of the reported quarter, compared with $319 million at the end of fiscal 2024.
Cumulative net cash provided by operating activities was $63.9 million at the end of the first quarter compared with $59.4 million a year ago.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, Techne has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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 these revisions has been net zero. Notably, Techne 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
Techne belongs to the Zacks Medical - Biomedical and Genetics industry. Another stock from the same industry, Exelixis (EXEL), has gained 8.2% over the past month. More than a month has passed since the company reported results for the quarter ended September 2024.
Exelixis reported revenues of $539.54 million in the last reported quarter, representing a year-over-year change of +14.3%. EPS of $0.47 for the same period compares with $0.10 a year ago.
Exelixis is expected to post earnings of $0.46 per share for the current quarter, representing a year-over-year change of +39.4%. Over the last 30 days, the Zacks Consensus Estimate has changed +2.3%.
Exelixis has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
