On Sep 11, we reaffirmed our long-term Neutral recommendation
) following a disappointing start to fiscal 2014. Currently, the
stock carries a Zacks Rank #3 (Hold).
ABAXIS INC (ABAX): Free Stock Analysis Report
ABBOTT LABS (ABT): Free Stock Analysis Report
ALERE INC (ALR): Free Stock Analysis Report
MWI VET SUPPLY (MWIV): Free Stock Analysis
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Why Still Neutral?
On Jul 25, Abaxis declared first-quarter fiscal 2014 results that
widely missed the Zacks Consensus Estimates. EPS of 14 cents in
the quarter was up 7.7% year over year but missed the Zacks
Consensus Estimate by a significant 9 cents. Although revenue
improved 3% to $43.2 million, it trailed the Zacks Consensus
Estimate of $49 million.
Gross margin continued to remain under pressure due to business
mix. Moreover, operating margin declined in the first quarter.
Abaxis also witnessed pressure in the international market with
lower sales. Despite encouraging growth in Asia-Pacific and rest
of the world, the poor performance in Europe dragged overseas
Barring growth in the veterinary market, the overall quarterly
performance was weak. Although the distribution relationship with
MWI Veterinary Supply Inc.
) is yielding positive outcomes, the same with
) in the medical market is yet to pay off.
On the positive side, Abaxis remains a strong player in its core
veterinary market that continues to record healthy growth. Given
the attractive market dynamics, we expect the current growth
trend to continue in the future.
Furthermore, Abaxis operates in a niche market of portable
medical and veterinary blood analysis systems and is slated for
growth in both the divisions. The company will now launch its
Piccolo system in the fast growing Chinese market.
Other Stocks to Consider
While we remain on the sidelines for Abaxis, we believe that
), carrying a Zacks Rank #1 (Strong Buy) is likely to do well. We
are also positive about MWI Vet that carries a Zacks Rank #2