Rivals Abaxis ($ABAX) and IDEXX Laboratories ($IDXX), both of which market diagnostics products to veterinarians, reported earnings within hours of each other--but garnered vastly different responses from investors. Abaxis reported its fiscal second quarter after the market closed Tuesday and saw its shares jump more than 20% the next morning to $52.39. IDEXX reported its fiscal third quarter Wednesday morning, and its shares dropped 11% to $68.31.
Why the discrepancy? Abaxis actually missed revenue forecasts, reporting 11% year-over-year sales growth to $56 million from continuing operations, versus the $57 million analysts were hoping to see, according to Zacks Investment Research. But its earnings per share jumped 36% to 34 cents, beating the consensus estimates by a couple of cents.
Abaxis, which derives most of its revenues from veterinary sales, enjoyed 10% sales growth in North America. It also improved its operating profit margin by 300 basis points. Sales of one of its most popular products, called VetScan, were so strong, in fact, that one analyst asked during the post-earnings conference call if the company had discounted the devices to spur new business.
"No," replied an emphatic Craig Tockman, Abaxis's vice president of sales and marketing. "We're just selling harder and selling smarter."
IDEXX reported a quarterly record profit of $44.2 million, or 54 cents a share, which also beat expectations. Like Abaxis, it missed revenue forecasts slightly, reporting $406 million in sales during the quarter versus the $407.1 million analysts had been expecting, according to Zacks.
But the problem was the company's forecast for the full year. IDEXX said it expects sales of about $1.6 billion and EPS in the range of $2.04 to $2.07--missing the consensus estimate of $2.10. During the conference call with analysts after the report, Chief Financial Officer Brian McKeon blamed the adjusted estimates on slower-than-expected market growth in Europe and "more challenging macroeconomic trends," including currency fluctuations.
IDEXX CEO Jonathan Ayers tried to put an optimistic spin on the company's forecasts, noting that he expected a strong sales contribution from SediVue, a new rapid urine-sample test for veterinarians. Ayers said he expected to place at least 1,000 of the instruments in offices in 2016, and that over time each device would generate $3,000 to $5,000 a year in revenues in North America alone.
Investors were clearly hoping for a rosier outlook, however. IDEXX's shares had risen more than 8% since late August to $76.74.
- here's Abaxis's earnings release and a transcript of its earnings call
- access IDEXX's earnings results here and a transcript of the call here
- read more from Zacks on Abaxis