IDEXX Laboratories, Inc.

IDEXX Laboratories had a strong Q1 2023 performance and delivered an all-around beat. The company’s strategic focus on execution, organic growth, and product portfolio expansion resulted in significant new business gains and sustained growth in recurring veterinary software revenues. In particular, CAG Diagnostic recurring revenues grew by almost 12%, primarily driven by nearly 14% organic growth in the US, supported by volume gains and benefits from higher net price realization. The company’s performance was reflected in its key metrics, such as high first-quarter premium instrument placements, steady new business gains, and continual growth in recurring veterinary software revenues. There was an 18% rise in operating profits and EPS on a comparable basis due to sturdy organic revenue growth, superior gross margin gains, and a $16 million payment from a customer contract resolution. IDEXX is anticipated to be in a favorable position to deliver value to its stakeholders based on its solid operating profits and EPS growth on a comparable basis. We give IDEXX Laboratories a ‘Hold’ rating with a revised target price.