Yahoo Finance Here's Why You Should Retain QIAGEN (QGEN) Stock for Now
QIAGEN N.V. QGEN is well-poised for growth in the coming quarters, backed by the solid execution of its Five Pillars of Growth strategy and advancements made in the portfolio. The company’s recently released 2023 first-quarter results reflected impressive growth across Non-COVID-19 product groups, which buoys optimism. However, escalating expenses and decreased COVID-19 sales do not bode well for QIAGEN.
In the past year, this Zacks Rank #3 (Hold) stock has declined 0.8% compared with the 6.9% rise of the industry and a 6.2% fall of the S&P 500 composite.
Upsides
Impressive Q1 Performance: QIAGEN ended the first quarter of 2023 with better-than-expected earnings, while revenues were almost in line with estimates. The company delivered high organic revenues exceeding its outlook of approximately $490 million, led by the strength of the non-COVID-19 base business.
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The quarter’s adjusted earnings per share (EPS) were 52 cents at the constant exchange rate (CER). The metric surpassed the previously announced guidance of 47 cents at CER.
Across product groups, Sample Technologies (comprising one-third of total sales) outperformed in the first quarter, with robust growth in non-COVID-19 applications and gains from instrument sales. QGEN continues to invest in key portfolio areas, including QIAcuity digital PCR, the syndromic system — QIAstat-Dx — and the integrated PCR testing system NeuMoDx.
The Five Pillars of Growth Strategy Drives Sales: Amid the uncertain macro environment, significant investments made in the Five Pillars of Growth strategy have contributed to high organic revenues across non-COVID-19 product groups.
Within the Diagnostic solutions product group, the QuantiFERON latent TB test was the main driver, with sales rising 19% at CER on growth in all regions. QIAGEN’s digital polymerase chain reaction (PCR) clinical testing system — QIAstat Diagnostics and NeuMoDx — progressed well in transitioning to non-COVID utilizations.
The QIAcuity portfolio of the PCR system and application kit generated impressive organic sales. This was driven by solid instrument placement and the increasing uptake of consumables across regions. The Sample Technologies group sustained its rising growth trend in the first quarter, supported by solid CER gains in consumables and instrument sales.
Portfolio Advancements to Benefit: Throughout the first quarter, QIAGEN made significant progress in its Sample to Insight portfolio. The launch of the QIAstat-Dx syndromic testing platform in Japan expands the list of countries where the instruments are currently used for the diagnostics of various diseases. On the first-quarter 2023 earnings call, QGEN had indicated developing new applications for blood infections, pneumonia and complex urinary tract infection panels.
Meanwhile, QIAGEN added the global pharmaceutical group, Servier, as a new partner to its companion diagnostics co-development program. The collaboration is set to develop companion diagnostic for TIBSOVO as a treatment for acute myeloid leukemia.
Within Genomics/NGS, QIAGEN Digital Insights launched an NGS analysis solution that can process a whole genome sequence in about 25 minutes. The enhanced CLC Genomics Workbench Premium product removes data analysis bottlenecks as seen in NGS. This accelerates the analysis and interpretation of whole genome sequencing and whole exome sequencing.
Downsides
Mounting Expenses Put Pressure: QIAGEN reported a contraction in the adjusted gross margin in the first quarter of 2023. The adjusted operating income (excluding items like acquisition-related intangible amortization, restructuring and integration and others) declined 47.5% year over year to $121.2 million in the first quarter. Higher R&D costs in the quarter represented 11.3% of sales made toward investments in the Five Pillars of Growth strategy for new products, test menus and applications.
COVID-19 Product Sales Decline: Headwinds related to the sales of the COVID-19 product group resulted in QIAGEN’s first-quarter top line declining 20% at CER. For 2023, the company expects a significant drop in the group’s sales.
Estimate Trend
QIAGEN has been witnessing a positive estimate revision trend for 2023. In the past 30 days, the Zacks Consensus Estimate for 2023 EPS has gone up from $2.10 to $2.12.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $2.05 billion, suggesting a decrease of 4.2% from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Zimmer Biomet ZBH, Penumbra PEN and Hologic, Inc. HOLX.
Zimmer Biomet, sporting a Zacks Rank #1 (Strong Buy) at present, has an earnings yield of 5.42% compared to the industry’s -1.86%. Zimmer Biomet’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 7.38%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Zimmer Biomet shares have increased 14.8% compared to the industry’s 28.8% decline in the past year.
Penumbra, sporting a Zacks Rank #1 at present, has an estimated growth rate of 64.1% for 2024. Penumbra shares have risen 122% against the industry’s 2.5% rise over the past year.
PEN’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 109.4%.
Hologic, carrying a Zacks Rank #2 (Buy) at present, has an earnings yield of 4.68% compared to the industry’s -7.62%. Shares of HOLX have risen 4.2% compared with the industry’s 2.5% growth over the past year.
Hologic’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 27.3%.
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