Analyst Note| Debbie S. Wang |
Idexx Labs posted strong third-quarter results that were largely consistent with our expectations and leave the firm on track to meet our full-year projections; we’re standing pat on our $301 fair value estimate. Some investors may have been disappointed by the slowing year-over-year growth in the rapid assay and reference lab product lines. However, we think this fits into the shifting patterns spurred by the pandemic and the usual seasonality seen in Idexx’s companion animal business. On one hand, vet services typically peak in the second quarter during the warm weather months, but that period in 2020 was subject to lockdown orders that led to pent-up demand that was unleashed in third quarter, making for a challenging year-over-year comparison. On the other hand, we think 2021 is reverting to the more typical seasonality with vet services peaking in second quarter again, which led to a more muted third-quarter performance. Either way, we see little to change our view of Idexx’s narrow moat and continue to think it will be difficult for competitors to catch up to this front-runner.