Why Is Bio-Rad (BIO) Up 12.8% Since Last Earnings Report?

It has been about a month since the last earnings report for Bio-Rad Laboratories (BIO). Shares have added about 12.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Bio-Rad due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Bio-Rad Rides on Solid Life Sciences Segment in Q4

Bio-Rad posted fourth-quarter 2018 adjusted earnings per share (EPS) of $2.13, which beat the Zacks Consensus Estimate of $1.61 by 32.3%. Earnings improved 12.1% from the prior-year quarter.

Adjusted EPS in 2018 was $5.84, up 38.1% year over year. The figure also surpassed the Zacks Consensus Estimate of $5.33 by 9.6%.

Revenues in Detail

Revenues in the quarter totaled $617.5 million, beating the Zacks Consensus Estimate by 1.1%. However, revenues declined 0.6% from the year-ago quarter but rose 1.9% at constant currency (cc).

Revenues in 2018 came in at $2.29 billion, up 6% year over year. The figure was ahead of the Zacks Consensus Estimate of $2.28 billion.

Per management, solid demand across many of its key product lines led to growth across most geographical regions.

Segmental Analysis

Sales at the Life Sciences segment totaled $239.6 million, up 0.3% year over year and 2.3% at cc. Per management, the upside reflects higher sales in the cell biology, droplet Digital PCR, gene expression and antibody products.

On a geographic basis, sales were particularly strong in the Americas and Asia Pacific.

Net sales at Clinical Diagnostics in the fourth quarter totaled $373.7 million, down 1.3% on a year-over-year basis. However, sales were up 1.7% at cc. The upside in the currency neutral sales indicates growth in immunology, infectious disease and quality-control product lines.

Geographically, sales rose in the Americas and Asia Pacific.

Margins

Gross profit in the reported quarter totaled $333.8 million, down 3.3% from the prior-year quarter. Gross margin came in at 54%, down 160 basis points (bps). Per the company, changes in product mix along with restructuring charges incurred for a planned consolidation of a manufacturing site in Europe led to the decline in gross margin.

Adjusted gross margin came in at 55.6%, up 60 bps year over year.

Adjusted operating income grossed $68.2, up 1% from the year-ago quarter.

Guidance Issued

For 2019, the company issued revenue growth guidance of 4-4.5% (cc). The Zacks Consensus Estimate for the same is pegged at $2.28 billion.

How Have Estimates Been Moving Since Then?

Fresh estimates followed a downward path over the past two months. The consensus estimate has shifted -23.37% due to these changes.

VGM Scores

Currently, Bio-Rad has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Bio-Rad has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

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