It has been about a month since the last earnings report for Qiagen (QGEN). Shares have added about 1.1% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.
QIAGEN Q4 Earnings Lag, Operating Margin Expands
QIAGEN N.V.’s fourth-quarter 2023 adjusted earnings per share were 55 cents (same at a constant exchange rate or CER), up 3.8% from the prior-year period. However, the figure missed the Zacks Consensus Estimate by 1.8%.
The adjustment excludes the impact of certain non-recurring items like business integration, acquisition and restructuring-related expenses, purchased intangible amortization expenses and non-cash interest expense charges, among others.
The GAAP earnings per share for the quarter was 42 cents, up 7.7% year over year.
For the full year, adjusted earnings were $2.07 per share, down 13% from the year-ago period’s levels. The reported figure fell short of the Zacks Consensus Estimate by 2.4%.
Revenues in Detail
Net sales in the fourth quarter were up 2.2% year over year to $509.2 million (up 1% at CER). The top line beat the Zacks Consensus Estimate by 1%. Sales at CER were $503 million, ahead of the outlook of at least $500 million. Fourth-quarter sales were driven by 8% CER growth in the non-COVID-19 portfolio.
Total revenues for 2023 were $1.97 billion, down 8.2% from the year-ago period’s levels. The figure surpassed the Zacks Consensus Estimate by 0.5%.
Geographical Revenue Analysis
In the quarter under review, sales from the Americas (50.3% of sales) totaled $256 million, up 6% year over year (up 6% at CER). Our model projected a year-over-year increase of 8.6% in this region.
The CER improvement was led by gains in the United States, which more than offset the headwinds from COVID-19 sales in the year-ago period.
Revenues from Europe, the Middle East and Africa (34% of sales) were up 2.4% reportedly (down 1% at CER) to $173 million. Our model’s projection was a year-over-year decline of 4.5%. Sales for non-COVID-19 product groups rose at a double-digit CER rate for both the fourth quarter and fiscal year 2023.
Revenues from Asia-Pacific/Japan (15.7% of sales) fell 9% year over year on a reported basis (down 8% at CER) to $80 million. This was wider than our model’s projected decline of 2.6% year over year.
Per the company, sales for non-COVID-19 product groups declined at a modest single-digit CER rate in the fourth quarter. Non-COVID sales for the region, excluding China, rose at a single-digit CER rate in the fourth quarter. In China (which comprised more than 6% of total QIAGEN sales in fiscal year 2023), sales declined more than 10% CER compared to the year-ago period due to ongoing weaker macroeconomic trends.
Segmental Details
As of the fourth quarter of 2023, QIAGEN had two major customer classes — Molecular Diagnostics and Life Sciences.
Molecular Diagnostics (representing 53.2% of net sales) revenues were up 5% on a reported basis (up 4% at CER) to $271 million. Our model projected year-over-year growth of 3.3% from this segment.
Life Sciences (46.8% of total revenues) reported revenues of $238 million, down 1% on a reported basis (down 2% at CER). Our model projected the segment’s revenues to improve 1% compared to last year’s same period.
Operational Update
The adjusted gross profit (excluding the amortization of acquisition-related intangibles) in the quarter under review fell 0.5% to $316.1 million.
Meanwhile, the adjusted gross margin contracted 168 basis points (bps) to 62.1% on a 7% rise in the cost of sales (excluding amortization) to $177 million.
Sales and marketing expenses of QIAGEN fell 3.9% year over year to $117.5 million. R&D expenses of $49 million were up 2.7% compared to the prior year’s quarter. G&A expenses declined 10.9% year over year to $28 million.
The adjusted operating income (excluding items like acquisition-related intangible amortization, restructuring and integration and others) increased 4.7% year over year to $124.2 million in the fourth quarter. Meanwhile, the adjusted operating margin expanded 57 bps to 24.4%.
Financial Update
QIAGEN exited the fourth quarter of 2023 with cash and cash equivalents and short-term investments of $1.06 billion compared with $1.42 billion as of Dec 31, 2022. The long-term debt (net of current portion) was $921.8 million at the end of the fourth quarter of 2023 compared with $1.47 billion at the end of 2022.
The cumulative net cash provided by operating activities at the end of the fourth quarter of 2023 was $459.5 million compared with $715.3 million in the year-ago period.
Guidance
QIAGEN initiated its financial outlook for 2024.
Full-year net sales are expected to be nearly $2.0 billion at CER. Consumables and related revenues are expected to drive growth, while larger-scale instrument sales remain challenging. The Zacks Consensus Estimate for 2024 revenues is pegged at $2.04 billion. The adjusted earnings per share for 2024 is expected to be about $2.10 at CER. The Zacks Consensus Estimate for the same is pegged at $2.18.
For the first quarter of 2024, the company expects net sales of at least $455 million at CER. The Zacks Consensus Estimate is pegged at $492.3 million. The adjusted earnings per share is expected to be at least 44 cents at CER. The Zacks Consensus Estimate for the metric is pegged at 51 cents.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -14.45% due to these changes.
VGM Scores
At this time, Qiagen has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, 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 F. 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 these revisions indicates a downward shift. It's no surprise Qiagen has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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