On Mar 28, we reiterated our long-term Neutral recommendation
) following healthy third quarter fiscal 2013 results. This
manufacturer of portable blood analysis systems for human medical
and veterinary purpose carries a Zacks Rank #3 (Hold).
ABAXIS INC (ABAX): Free Stock Analysis Report
ABBOTT LABS (ABT): Free Stock Analysis Report
HENRY SCHEIN IN (HSIC): Free Stock Analysis
MWI VET SUPPLY (MWIV): Free Stock Analysis
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Why the Reiteration?
On Jan 31, Abaxis reported third-quarter fiscal 2013 EPS of 22
cents, a beat of 10% over the Zacks Consensus Estimate. The
result also sailed past the year-ago EPS by 69.2%. Revenues
surged 32% year over year to $49.8 million, surpassing the Zacks
Consensus Estimate of $46 million in the quarter.
Abaxis serves a niche market with low worldwide penetration
supporting solid growth across all geographical regions.
Considering its distribution relationship with
MWI Veterinary Supply
) and Abbott Point of Care, a part of
), the company is well poised to expand its foothold in target
markets. Abaxis' focus and investment towards further penetration
of the North American and overseas markets should continue to
support the current double-digit growth trend in the future.
The company's mainstay veterinary segment (accounting for 80% of
total revenues) continues to record robust growth. Increasing
service revenue from Abaxis Veterinary Reference Laboratories
(AVRL) is another upside. Under the medical segment, Piccolo
system placements remained at an encouraging level with higher
uptake across North America as well as Europe. The company is
also working on getting large-scale business for Piccolo.
On the tepid side, Abaxis' gross margin went downhill for the
second consecutive quarter due to unfavorable product mix in the
vet market and lower average selling price in the medical market.
Additionally, the company's is highly dependent on distributors
) in various countries. Over-reliance on sole distributors in
lucrative target markets and failure to maintain a healthy
relationship is another cause of concern. Moreover, the
competitive environment remains tough. Despite a strong quarter
with several takeaways, looming concerns keep us on the
There was no earnings momentum over the last 30 days. The Zacks
Consensus Estimate for 2013 and 2014 is currently pegged at 80
cents and $1.13 per share. The estimates represent respectively a
year-over-year increase of 37.4% and 41.2%.