Why Is Qiagen (QGEN) Up 19% Since Last Earnings Report?

It has been about a month since the last earnings report for Qiagen (QGEN). Shares have added about 19% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Qiagen 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.

QIAGEN Q4 Earnings Beat Estimates, Margins Expand

QIAGEN N.V.’s fourth-quarter 2019 adjusted earnings per share were 48 cents, up 20% year over year (up 20% at constant exchange rate or CER as well). The figure beat the Zacks Consensus Estimate by 9.1%. At constant exchange rate or CER, the quarter’s adjusted earnings was 48 cents as well.

Reported earnings for the quarter was 19 cents per share, down 26.9% year over year.

For 2019, adjusted earnings came in at $1.43, up 6.7% from the year-ago tally. The figure beat the Zacks Consensus Estimate by 2.1%.

Revenues in Detail

Net sales at actual rates in the fourth quarter rose 2.6% on a year-over-year basis to $413.5 million (up 4% at CER). Also, the top line beat the Zacks Consensus Estimate by 1.1%.

For 2019, revenues totaled $1.53 billion, up 2% (up 4% at CER) from the year-ago tally. The figure beat the Zacks Consensus Estimate by 0.7%.

Geographical Revenue Update

In the quarter under review, sales from the Americas (44% of revenues) totaled $180 million, up 6% on a reported basis (up 7% at CER). Revenues from Europe-Middle East-Africa (35% of revenues) rose 2% reportedly (up 5% at CER) to $146 million. Further, revenues from Asia-Pacific/Japan (21% of revenues) fell 4% year over year on a reported basis (down 4% at CER) to $87 million.

Segmental Details

As of the fourth quarter of 2019, QIAGEN has two major customer classes which are Molecular Diagnostics (that includes human healthcare including Precision Medicine and companion diagnostics) and Life Sciences (that includes Pharma and Academia/Applied Testing).

Molecular diagnostics (representing 48% of net sales) revenues were up 3% at CER to $198 million.

Life Sciences (52% of total revenues) reported revenues of $216 million, up 4% at CER. Sales derived from Applied Testing/Academia rose 3% at CER to $138 million. Pharma sales climbed 5% at CER in the fourth quarter to $78 million.

Operational Update

Gross profit in the quarter under review rose 5.6% to $279.6 million. Gross margin expanded 195 basis points (bps) to 67.6%.

Adjusted operating income (excluding items like acquisition-related intangible amortization) rose 18.5% year over year to $121.9 million in the fourth quarter. Adjusted operating margin expanded 397 bps to 29.5%.

Financial Update

QIAGEN exited 2019 with cash and cash equivalents of $623.6 million, down from $1.16 billion at the end of fiscal 2018. Cash flow from operating activities at the end of fiscal 2019 was $330.8 million compared with $359.5 million a year ago. Moreover, the company reported free cash flow of $212.9 million at the end of fiscal 2019, compared with $249.7 million a year ago.

2020 Guidance

QIAGEN has initiated its 2020 guidance. Total net sales growth is expected at about 3-4% at CER. The Zacks Consensus Estimate for 2020 revenues is pegged at $1.60 billion.

Adjusted EPS guidance for the full year is estimated in the band of $1.52-$1.54 at CER. The Zacks Consensus Estimate for 2020 EPS is pinned at $1.48.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

Currently, Qiagen has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

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

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision has been net zero. Notably, Qiagen has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.