IDEXX Laboratories, Inc. (Nasdaq: IDXX) provides VetTest analyzers for pet blood/urine chemistry and diagnostic tests to detect heartworm, feline leukemia and other diseases. The company also provides veterinary consulting services and vet practice management software.
Further, lest anyone think that IDXX's business has totally 'gone to the dogs' (and cats), the company also offers tests for contaminants in water and antibiotics in milk, and its OPTI product line features electrolyte and blood gas analyzers.
Analysts expect 10-15% revenue growth in FY 2008 after a 24% increase in FY 2007. Costs are moderate, and margins should remain adequate.
Further, although roughly 70% of IDXX's business is U.S.-based, which typically would represent a concern, given the likely U.S. economic slowdown, it's not as relevant here. The reason? Pet health care spending is remarkably resilient in the U.S., with Americans demonstrating a willingness to sacrifice much to care for these adored, extended members of the family. The Reuters FY 2007/FY 2008 EPS consensus estimates for IDXX are $1.57 to $1.86.
The risks? Analysts are keeping an eye on IDXX's research and development costs, and on intensifying competition in the sector.
Stock Analysis: IDEXX Labs is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from IDXX's shares. Sell/Stop Loss if you were to purchase shares in this company: $38.
Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.
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