QIAGEN Beats Both Earnings and Revs - Analyst Blog

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Qiagen ( QGEN ) reported third quarter 2013 adjusted EPS of 26 cents, beating the Zacks Consensus Estimate of 25 cents and up 8.33% year over year. However, considering the one-time items, reported EPS came in at 17 cents in the third quarter of 2013, registering a rise of 41.6% over the prior-year quarter figure of 12 cents.

Revenues in Detail

Adjusted net sales in the quarter amounted to $323.8 million, up 6% year over year (up 7% at constant exchange rates or CER) and ahead of the Zacks Consensus Estimate of $320 million. The outperformance was primarily on the back of strong sales growth across all geographic regions and customer classes.

Among the product categories, Consumables and related revenues (accounting for 88% of net sales) increased 8% year over year at CER. Instrumentation revenues (accounting for the rest) were led by double-digit CER growth in Molecular Diagnostics, supported by increasing revenues from multi-year reagent rental agreements of the QIAsymphony automation system placements. Instrument sales were higher in Applied Testing, partially offset by lower sales in Pharma and Academia, mainly due to reduced funding in life sciences research.

Geographic Regions in Detail

Region wise, the Americas (50% of revenues) witnessed 8% sales growth at CER, owing to higher sales in Brazil and Mexico. Sales in the U.S. were stable as lower sales of products used for HPV (human papillomavirus) screening were offset by growth in the rest of the product portfolio.

Revenues from Europe-the Middle East-Africa (30%) and Asia-Pacific/Japan (19%) increased 4% and 7%, respectively, at CER. China, India and Taiwan recorded robust sales, while in Japan the figure remained unchanged. The top 7 emerging markets accounted for 15% of revenues and registered sales growth of 38% at CER.

Segments in Detail

Qiagen primarily generates revenues from Molecular Diagnostics, Applied Testing, Pharma and Academia, which represented 51%, 8%, 19% and 22% of adjusted net sales, respectively, during the quarter. Molecular diagnostics sales registered a 10% increase at CER as the QIAsymphony automation platform broke through 1,000 installed systems. Sales derived from Applied Testing climbed 6% at CER, the increase originating from both consumables and instruments.

Sales also improved in Asia Pacific and Japan. Pharma sales were up 3% at CER, with high sales of consumables being partially neutralized by declining figures in instruments. Academia sales were up only 2%, at CER due to weakening of the U.S. market. However, healthy revenues from China and the Asia Pacific region propelled growth during the quarter.

Operational Update

Gross profit rose to $210 million in the third quarter of 2013 as against $199 million in the year ago quarter. Gross margin contracted 20 basis points at 65.2% as against 65.4% in the year ago quarter.

Operating income in the third quarter of 2013 was $43.4 million as compared to $48.5 million in the year-ago quarter, a fall of 10.58% year over year. Operating margin in the reported quarter was 25.9% from the year ago figure of 32.2%.

Adjusted operating income increased 5% year over year to $87.7 million. Adjustments involved excluding restructuring and acquisition-related costs, share-based compensation and amortization of intangible assets. The adjusted operating income margin stood at 27.1% of adjusted net sales as compared to 27.5% in the year-ago quarter.

Financial Update

The company exited the quarter with cash and cash equivalents and short term investments of $355 million as on Sep 30, 2013, against $484 million as on Dec 31, 2012, reflecting a downfall of $129 million.

QIAGEN launched a $100 million share repurchase program during the quarter. The first $10 million tranche was completed in early October with the repurchase of 483,576 shares on the Frankfurt Stock Exchange.

Outlook

QIAGEN reiterated its fiscal 2013 outlook. The company still expects adjusted net sales to rise by 5% at CER. Sales growth is expected to be impacted by volatile currency in the U.S. The company also reaffirmed its 2013 EPS guidance at $1.13 (same as that provided on Jul 30, 2013). The Zacks Consensus Estimate for sales is $1305 million for FY13 and EPS stood at $1.02, respectively.

For the fourth quarter of 2013, the company expects adjusted sales growth of 6% at CER and adjusted EPS of $0.35. The Zacks Consensus Estimate of the same are $355 million and $0.34 respectively.

Our Take

Qiagen has been continually undertaking several strategic initiatives in the global Sample & Assay Technologies market to deliver an impressive performance in the near term. The company is consistently focusing on innovation and geographic expansion to drive organic growth. Additionally, the acquisition of CLC bio demonstrates QIAGEN's keen interest to emerge as a forerunner in next-generation bioinformatics.

Currently, the stock carries a Zacks Rank #3 (Hold).Other stocks that appear impressive include Actelion Ltd. ( ALIOF ), AMAG Pharmaceuticals, Inc. (AMAG ), each carrying a Zacks Rank #1 (Strong Buy) and Illumina Inc. ( ILMN ) carrying a Zacks Rank #2 (Buy).



ACTELION LTD (ALIOF): Get Free Report

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QIAGEN NV (QGEN): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: ALIOF , AMAG , ILMN , QGEN

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