The Company Taking Animal Healthcare to New Levels (IDXX)

IDEXX Labs Is Perfectly Positioned for Decades of Growth…and It’s a Bargain!

Four decades ago, IDEXX (NASDAQ: IDXX) began in Maine. Today, IDXX is part of the S&P 500, has more than 10,000 employees, and operates in 175 countries. That’s quite a journey, but it’s also a testament to how much in demand its products and solutions have become over that time.

Today, IDXX has three divisions: Companion Animal Group, Livestock, Poultry and Dairy (PLD) Group, and Water. All three of these divisions complement one another, and that has been a key factor of IDXX’s success. It has stuck to what it does best and expanded into sectors where it can continue to provide its strengths to a new audience.

 

Source: Seeking Alpha

 

Let’s Talk About Water

While I’ve discussed its Companion Animal and PLD group, it’s important to talk about its lesser-known division, Water. This division is a perfect example of what I was talking about earlier. You can’t really keep any animals (including humans!) healthy if their water sources are contaminated.

So, if you’re a multinational animal health player, it makes perfect sense that you should expand into water safety and diagnostics. IDXX offers its water diagnostics solutions in 120 countries, testing for cryptosporidium, enterococci, coliform, and e. coli to name a few. Its product line is used on groundwater, wastewater, drinking water, as well as recreational water supplies. IDXX has even diversified with its divisions to expand its ability to provide different economic sectors.

 

Source: Rapid Microbiology

 

As you can see from the vials above, once you have a robust water diagnostics division, it’s pretty easy to build that out to address needs beyond the anticipated markets.

Quite often, animals’ water source is fundamental to their ability to remain healthy and disease free, particularly for livestock that may use natural water sources for much of their hydration. For other livestock that don’t graze, it’s even more crucial to maintain quality water resources for these penned and caged animals. Also, as potable water resources become more difficult to sustain, or in the case of many parts of the world, including the American West, drought can cause particular challenges.

For example, how do you reconcile the needs for agriculture and livestock production versus human (and companion pet) consumption?

Also, in regions of the US where fracking and other unconventional drilling methods are used, there’s an increased chance of polluting aquifers that farmers use for crops and livestock. This makes water management issues just as important as energy issues as we move forward, but IDXX already is on the scene. Its products will continue to grow in value and demand.

 

IDXX MegaTrend Performance

While the price of IDXX stock has been hit this year, that’s not a bad thing for investors that haven’t dipped their toe in yet.

In early May, the company provided decent numbers for the first quarter and beat analysts’ estimates, but its guidance for the year was adjusted lower as the growing global economic headwinds were showing up in its business. In skittish markets like this, analysts care about earnings, but they care about guidance even more.

While most companies have guided lower after Q1 or Q2 earnings, analysts continue to overreact to news that growth may slow slightly. Sometimes, big global leaders restate their earnings expectations lower simply to be conservative, or to give an honest assessment of a worst-case scenario. Wall Street doesn’t care, it just freaks out.

 

 

That emotional roller coaster is good for investors looking for a good time to get in. The stock has now delivered restated guidance, and it has been punished.

Even now, in the past 13 years, IDXX has returned an average of 166% a year! Even if this isn’t the bottom, we’re a lot closer to it than we are the top, and that makes this an excellent time to start accumulating IDXX stock before everyone jumps in again. CLICK HERE to get started!