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IDEXX Laboratories Inc IDXX

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Animal Healthcare Is Barking Up the Right Tree, but Valuations Remain High

Debbie S. Wang Senior Equity Analyst

Analyst Note

| Debbie S. Wang |

Amid much media attention and anecdotal evidence suggesting widespread, significant growth in pet adoptions across the United States during the pandemic, we took a closer look and estimate there was a 13% net increase in dog adoptions in 2020 year over year, based on consolidated shelter data and American Kennel Club records. It is less clear what the rise in cat adoptions was, as there is simply less reliable data for cats. Nonetheless, we think this increase in adoptions, along with the extended period of intense pet bonding for new and existing pet owners during the pandemic, should support the robust increase in pet healthcare spending seen initially in 2020 to extend over the next eight to 10 years, reflecting the general lifespan of newly adopted pets. While we have dialed up our cash flow projections for narrow-moat Idexx Laboratories and wide-moat Zoetis, their share prices remain rich and imply wildly optimistic expectations.

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Company Profile

Business Description

Idexx Laboratories primarily develops, manufactures, and distributes diagnostic products, equipment, and services for pets and livestock. Its key product lines include single-use canine and feline test kits that veterinarians can employ in the office, benchtop chemistry and hematology analyzers for test-panel analysis on-site, reference lab services, and tests to detect and manage disease in livestock. The firm also offers vet practice management software and consulting services to animal hospitals. Idexx gets about 38% of its revenue from outside the United States.

One IDEXX Drive
Westbrook, ME, 04092
T +1 207 556-0300
Sector Healthcare
Industry Diagnostics & Research
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Aggressive Growth
Employees 9,300