Please ensure Javascript is enabled for purposes of website accessibility

Why Idexx Laboratories Stock Gained 19% in 2018

By John Ballard - Updated Apr 16, 2019 at 11:37PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The leader in veterinary diagnostics continued to report strong growth last year.

What happened

Shares of Idexx Laboratories (IDXX -0.06%) climbed 18.95% last year, according to data provided by S&P Global Market Intelligence. The stock was up about 60% through September, but the turmoil in the markets in the last three months of the year took away most of that return. Despite the dip, the leader in veterinary services still looks like a good investment.

Check out the latest Idexx Laboratories earnings call transcript.

SPY Chart

SPY data by YCharts.

So what

Last year was another typical one for Idexx, which posted double-digit growth on both the top and bottom lines through the first three quarters of the year. The company entered 2018 having grown organic revenue and earnings per share 10% and 20% year over year, respectively, in 2017, and the numbers got even better in 2018.

Idexx grew organic revenue 12% year over year to $1.663 billion through the first three quarters of 2018. Earnings per share soared 31% year over year. 

A young couple and their dog wearing Santa Claus hats and a string of Christmas lights draped around their necks take a self-portrait during Christmas.


The momentum was so strong that management kept raising the full-year outlook through the second quarter. However, that changed in the third quarter, when management slightly lowered expectations for full-year organic revenue to grow by 11.5% to 12% year over year. The updated outlook was somewhat lower than the 12.5% organic revenue growth management had previously called for at the high end of the range. 

That seems like a silly reason to punish the stock, but when there is pessimism hovering over the broader market, any sign of slowing momentum can cause short-term-focused investors to hit the sell button -- especially for stocks like Idexx that trade for high price-to-earnings ratios. 

Now what

Idexx continues to benefit from more people, especially millennials, spending more on pet care, and pet owners will spend on their furry babies no matter what the economy is doing. This is one reason why Idexx shares typically trade for a high valuation.

Early 2019 guidance calls for continued growth in the new year, with organic revenue expected to grow 9.5% to 11% over 2018. That should translate to earnings-per-share growth of 15% to 18% (adjusted for changes in foreign currency conversion rates). Investors probably balked at management's revenue guidance, which is lower than previous figures. However, the long-term trend of increased spending on pet care is in the company's favor, which should keep Idexx growing for many years. 

John Ballard has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Idexx Laboratories. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

IDEXX Laboratories, Inc. Stock Quote
IDEXX Laboratories, Inc.
$396.43 (-0.06%) $0.25

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/14/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.