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On Friday, Jefferies adjusted its outlook on Bio-Rad Laboratories stock, lowering the price target to $285 from the previous $315, while keeping a Hold rating on the shares. The adjustment comes amid concerns about the company’s growth prospects due to increased competition in the digital PCR (ddPCR) technology space, a field where Bio-Rad has been a pioneering force. The stock, currently trading at $247.16, sits near its 52-week low of $243.76, reflecting market uncertainties. InvestingPro data shows 5 analysts have recently revised their earnings expectations downward for the upcoming period.
The firm’s analysts noted that the entry of a significant competitor, Qiagen (NYSE:QGEN), is likely to affect Bio-Rad’s future growth. While the ddPCR technology, estimated to contribute approximately $350 million, is still expected to be accretive to Bio-Rad’s core growth, it may not replicate its past success, which saw a compound annual growth rate (CAGR) of around 20%. The analysts’ forecasts for Bio-Rad are generally aligned with Street expectations, suggesting no major surprises in the near term. With annual revenue of $2.57 billion and a market capitalization of $7.91 billion, Bio-Rad maintains a strong financial position, supported by a healthy current ratio of 6.48.
Additionally, Jefferies commented on Bio-Rad’s recent move to acquire Stilla, a privately-held company, viewing it as a defensive rather than a proactive strategy. This acquisition, along with delays in the Continuum project, could potentially create confusion about Bio-Rad’s strategy in the market’s eyes. Moreover, expectations for the acquisition to be accretive to earnings within 18-24 months are seen as adding further margin pressure.
The analysts forecast that Bio-Rad’s ddPCR segment will grow at a high single-digit CAGR in the coming years. However, they also pointed out that the near-term outlook is challenging, citing biotech funding constraints and headwinds from the National Institutes of Health (NIH) as potential obstacles for the company.
Bio-Rad Laboratories, trading on the New York Stock Exchange under the ticker (NYSE:BIO), will continue to navigate the competitive landscape of the biotechnology sector as it aims to maintain its position and manage growth expectations in light of these new developments. According to InvestingPro’s Fair Value analysis, the stock appears slightly undervalued at current levels. For deeper insights into Bio-Rad’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers, along with 8 additional ProTips and extensive financial metrics.
In other recent news, Bio-Rad Laboratories reported its fourth-quarter 2024 earnings, revealing net sales of $668 million, which fell short of the $681.29 million forecast. However, earnings per share slightly exceeded expectations at $2.90 compared to the anticipated $2.86. The company experienced a 2% year-over-year decline in net sales, with the Life Science Group seeing a significant 12.8% drop, while the Clinical Diagnostics Group reported a 3.3% increase. Looking ahead, Bio-Rad projects currency-neutral revenue growth of 1.5% to 3.5% for 2025, with strategic acquisitions and product innovations expected to drive growth. Citi analyst Patrick Donnelly adjusted the price target for Bio-Rad to $400 from $450, maintaining a Buy rating, following the company’s forecast for core FY25 growth. The company’s guidance on gross margin and operating profit margin for FY25 was lower than market expectations, influenced by foreign exchange rates and reimbursement challenges. Despite these challenges, Citi remains optimistic about improving trends in Bio-Rad’s Life Sciences sector, particularly in process chromatography and digital droplet PCR technology.
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