IDEXX and Abaxis trade fortunes on Wall Street as earnings surprise investors

Last quarter, veterinary diagnostics maker Abaxis ($ABAX) saw its stock soar on better-than-expected earnings, while rival IDEXX Laboratories ($IDXX) plunged on a revenue miss. This quarter, the companies' fortunes were reversed.

On Jan. 28, Abaxis reported that revenues in its third fiscal quarter dropped 5.7% year over year to $52.9 million, missing the average analyst estimate of $59 million, according to Zacks Equity Research. Its net income of $8 million, or $0.35 a share, beat estimates by a penny but were a disappointment to investors, who pushed the stock down 13% to $43.65 by noon the next day.

During a conference call with investors, Abaxis reported that its North American animal health sales fell 8% to $32.2 million, and that the number of VetScan blood-analysis systems it sold fell by half. Abaxis CFO Ross Taylor explained that year-over-year comparisons were difficult because the third quarter of 2014 was "unusually strong," as new distributors were brought on board and the company placed 100 VetScans in VCA hospitals.

When an analyst asked if the large dip in VetScan placements indicated that rivals might be catching up to Abaxis, CEO Clinton Severson acknowledged "it's a competitive environment." He added that the company was working with its distributors to secure more in-office demonstrations of the technology. "Once we get the demo we have a very high percentage close," he said.

On January 29, IDEXX reported that its fourth-quarter revenues jumped 14% year over year to $400 million, in line with expectations, while its net income came in at $44.3 million or $0.48 a share, handily beating forecasts. IDEXX's stock was up 7% to $69 in morning trading.

IDEXX, which sells a range of chemistry and hematology analysis instruments, told investors during a conference call that placements of its Catalyst One chemistry analyzer reached a record 694 units during the quarter. More than half of those were placed in "new and competitive" accounts, said CEO Jonathan Ayers. He added that Catalyst One will begin shipping in Japan this quarter and that he predicts it's "a market with significant opportunity."

Ayers noted in the earnings release that IDEXX's new test for kidney disease in pets, called SDMA, has been boosted by its inclusion in guidelines from the International Renal Interest Society, a board of 15 veterinarians. Ayers said that "the inclusion of SDMA as an important marker for renal function is a worldwide endorsement."

For the full year, IDEXX's net income rose 6% year over year to $192.1 million on sales that were up 8% to $1.6 billion. For 2016, the company is predicting revenue growth below 3% because of the impact of negative foreign exchange rates. It expects earnings growth of 2% to 6%.

- here's IDEXX's earnings release
- its earnings call transcript is here
- access Abaxis' release here
- read a transcript of its earnings call