Bio-Rad (BIO) to Report Q3 Earnings: What's in the Cards?

Bio-Rad Laboratories, Inc. BIO is slated to report third-quarter 2020 results on Oct 29, after the closing bell.

In the last-reported quarter, the company’s earnings per share (EPS) of $1.91 surpassed the Zacks Consensus Estimate by 23.9%. Moreover, its earnings surpassed the consensus estimate in three of the last four quarters and lagged in one. The trailing four-quarter average surprise is 18.2%.

Factors at Play

According to Bio-Rad’s last update, its manufacturing operations team has responded to the pandemic strategically. Although in the initial phase of the pandemic, the company experienced some supply chain disruptions,  since the middle of the second quarter, it has ramped up production to meet increased demand of mainly its PCR instruments and reagents. This uptrend is expected to be reflected in the company’s third-quarter results.

Further, as confirmed during the second-quarter earnings call, the pandemic resulted in a pronounced change in product demand across the company’s portfolio. While the company recorded strong orders for Polymerase Chain Reaction (PCR)-based products related to COVID-19 testing and research, lower demand resulted mainly within the clinical diagnostics portfolio due to widespread lockdowns. This trend is likely to have continued in the third quarter leading to strong sales particularly within core PCR products, Droplet Digital PCR and Process Media.

BioRad Laboratories, Inc. Price and EPS Surprise

BioRad Laboratories, Inc. Price and EPS Surprise

BioRad Laboratories, Inc. price-eps-surprise | BioRad Laboratories, Inc. Quote

Bio-Rad, in April, launched SARS-CoV-2 Total Ab test, which is a blood-based immunoassay kit to help determine if an individual has developed antibodies to SARS-CoV-2, the virus causing COVID-19. Notably, this test got both the FDA’s Emergency Use Authorization (EUA) and CE Mark approval. The company has been ramping up its production to meet surging demand globally. This is likely to have significantly boosted the company’s third-quarter top line.

The company also received another EUA in May for its SARS-CoV-2 Droplet Digital PCR (ddPCR) test kit. Bio-Rad, which is already riding on robust demand for its PCR and ddPCR products, is likely to have been benefited from the launch of the test kit in the third quarter.

However, academic research labs around the globe are currently operating materially below capacity. This might have impacted the company’s third-quarter top line. Clinical Diagnostics segment too is expected to have experienced weakness across all its product lines due to reduced demand from lower noncritical hospital and clinic visits.

Q3 Estimates

The Zacks Consensus Estimate for third-quarter 2020 revenues is pegged at $565.3 million, suggesting a 0.8% rise from the year-ago figure.

The Zacks Consensus Estimate for the company’s EPS of $1.85 suggests an improvement of 14.9% from the year-ago figure.

What Our Model Suggests

Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has good chances of beating estimates. However, this is not the case here as you can see:

Earnings ESP: Bio-Rad has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank:The company currently carries a Zacks Rank #3.

Stocks Worth a Look

Here are a few medical stocks worth considering as these have the right combination of elements to beat on earnings this reporting cycle.

Humana HUM currently has a Zacks Rank #2 and an Earnings ESP of +3.35%.

IDEXX Laboratories IDXX has an Earnings ESP of +0.35% and is a Zacks #2 Ranked stock. You can see the complete list of today’s Zacks #1 Rank stocks here.

LHC Group LHCG has an Earnings ESP of +1.85% and a Zacks Rank of 2, at present.

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