Qiagen (NASDAQ: QGEN) reported third-quarter earnings in line with its revenue and earnings guidance, which disappointed investors who have come to expect earnings beats.
Qiagen results: The raw numbers
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What happened with Qiagen this quarter?
- The QuantiFeron-TB test continues its substantial growth with sales above management's target of 25% at constant exchange rates, helping the molecular diagnostics segment grow 9% year over year at constant exchange rates. The fourth generation of the test was recently launched in the U.S.
- Qiagen has more than 25 master collaboration agreements in place with drug companies to develop companion diagnostics for its cancer therapies, which should help drive revenue from its molecular diagnostics segment in the future.
- Installation of the QIAsymphony automation system continues at a solid pace, with almost 2,000 systems in place. Those machines are helping drive consumables revenue for tests used on the machine, which were up 8% year over year at constant exchange rates.
- In the life sciences division, applied testing continues to be the big winner, with 14% year-over-year growth at constant exchange rates thanks to the company's portfolio of forensics products. But pharma and academia dragged down the division with year-over-year growth at constant exchange rates of 4% and 2%, respectively.
- The GAAP operating income and earnings had charges in the year-ago quarter that artificially inflate the growth, so the adjusted numbers, which were up 9% and 10%, respectively, are a better measure of bottom-line growth. Importantly, even when adjusted, they're growing faster than revenue, showing how Qiagen is becoming more efficient.
What management had to say
Beyond the QIAsymphony, Qiagen's next-generation sequencing (NGS) machine, the GeneReader, should also help drive consumable sales, which Qigen's CEO Peer Michael Schatz said are progressing:
While the growth in instrument sales picked up in the third quarter after a sluggish first half, Schatz thinks it can accelerate from here:
Management reaffirmed its guidance for adjusted earnings of $1.25 to $1.27 per share at constant exchange rates. While investors clearly would have liked to have seen an increase in guidance, the current range is still substantially higher than the $1.11 per share Qiagen posted last year.
Looking into next year, Qiagen has five new FDA applications to sell companion diagnostics under review. And the QuantiFeron-TB test should continue its robust growth, especially as the company pushes into China.
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