IDEXX has been building reliable veterinary devices since 1983. Recently, the company acquired ezyVet, a company that provides cloud software and information-management systems for veterinarians.
Many investors believe that the acquisition signals a new era in veterinary medicine and could help establish IDEXX Laboratories as a leading provider of cutting-edge services.
What Does IDEXX Laboratories Do?
IDEXX makes products and services primarily used by veterinarians who treat companion animals, livestock, and poultry.
Some of the company’s core products and services include:
- Imaging systems that veterinarians can use to see internal structures.
- Hematology analyzers that let veterinarians analyze blood samples.
- Urine sediment analyzers that let veterinarians confirm diagnoses by analyzing urine content.
- Tests that offer rapid results for heartworms and other common health conditions.
- Educational courses that teach people how to use IDEXX devices and treat animals for specific conditions.
- Veterinary software that makes it easier for health providers to track metrics, keep up with changes in veterinarian science, and streamline services to meet client needs quickly.
IDEXX Financials Rise Impressively
IDEXX’s financials from 2020 and the first quarter of 2021 show that the company has done extremely well. Between the first quarter of 2020 and the first quarter of 2021, IDEXX’s revenues grew by 24 percent.
Not surprisingly, the company’s expenses also increased as it manufactured more devices and entered new markets. Expenses only grew by 4 percent, showing that IDEXX is bringing in much more money than it spends, and crucially is growing its margins.
As investors cotton on to the growing margins accompanying top line growth, expect FinTwit, WallStreetBets and other groups of influential retail traders to take note.
Why Is IDEXX Stock Going Up?
Apart from increasingly attractive financials, several other factors have contributed to IDEXX’s increasing stock value.
Acquiring ezyVet stands out as one of the most important reasons that the stock price has risen. Moving into cloud technology shows that IDEXX wants to keep up with the evolving preferences of its clients.
Cloud services should also make it faster and easier for veterinarians to track metrics, get test results, and adopt upcoming features that will improve services for patients.
From a financial perspective the cloud support means that Idexx shares can likely trade at a higher multiple because of the scalability of the service.
The coronavirus pandemic may also have contributed to the skyrocketing IDEXX share price. During more than a year of social distancing, many people turned to companion animals for support.
Shelters received fewer dogs and cats during 2020, which suggests people who would have given up their pets during other years decided to keep them. Similarly, increased demand kept many shelters empty.
As more households adopted companion animals, veterinarians experienced a surge in new patients. Veterinarians have increased the frequency with which they perform diagnostic tests. With more work to do, animal hospitals invested in more and newer devices. Many of them chose IDEXX.
The company’s revenues grew has soared and institutions have taken note and accumulated shares en masse.
Is It Too Late to Buy IDEXX Stock?
In 2015, you could buy a share of Idexx for about $75. Even investors who bought shares in 2019 have seen significant growth over the last two years. The 2019 price peaked around $290. Like most stocks, though, the value fell sharply at the beginning of the pandemic. On March 10, investors could buy the stock for the low price of $183.
IDEXX stock did not stay low for long. In fact, the dip also signaled the beginning of rapid growth. By the end of July, shares were selling for about $400. By the end of the year, the price topped out just a few cents shy of $500.
IDEXX shares have seen even faster growth during June and July of 2021. At the beginning of June, shares sold for about $550. On July 23, the price reached $693.74.
So, does this mean that it’s too late for you to make money by buying IDEXX stock?
A minority of stock market analysts believe that the company’s stock can reach $900, possibly by the end of 2021. If this is true, investors still have an excellent opportunity to buy shares.
Granted, this is is a pretty lofty target. But the new technology cloud platform has the potential to rapidly expand revenues and multiples. After conquering local markets, international expansion is on the horizon for further market capture.
IDEXX Stock Forecast: How High Can It Go?
If IDEXX can expand into other markets as successfully as it has over the last few years then the stock price could easily touch $900.
The fact of the matter is that IDEXX faces a lot of competition from other companies that make diagnostic devices and veterinary software. This is a challenge and an opportunity. If IDEXX can convince veterinary hospitals that it has superior technology, it will likely capture a larger portion of the market share. The company has a lot of growth opportunity.
From a discounted cash flow perspective, IDXX share price has a ceiling of around $577 per share but obviously it has traded higher than that suggesting risk is high for new investors. Price volatility is all high which should give conservative investors pause before jumping in with both feet.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.