Early prediction of acute diseases with the help of advanced diagnostics devices and continuing research breakthroughs have helped the diagnostics and research industry grow substantially over the past few years. Increasing investments in the healthcare sector and the integration of advanced technologies make the industry’s long-term prospects bright.
The COVID-19 pandemic has accelerated the growth of the diagnostics and research industry over the past year. Indeed, the global COVID-19 diagnostics market is projected to grow at a high CAGR between 2022 – 2030. And the global infectious disease diagnostic market is estimated to grow at a 6.8% CAGR from 2021 – 2030.
Therefore, we think fundamentally sound stocks Agilent Technologies, Inc. (A) and Mettler-Toledo International Inc. (MTD) could be solid bets now. Our proprietary POWR Ratings system has rated these stocks ‘Strong Buy.’
Agilent Technologies, Inc. (A)
A provides core bio-analytical and electronic measurement solutions to the life diagnostics and applied chemical markets. The Santa Clara, Calif.-based concern offers electronic and bio-analytical measurement, semiconductor, and board testing.
The U.S. Food and Drug Administration (FDA) has approved A’s Ki-67 IHC MIB-1 pharmDx (Dako Omnis) to be used as an aid in identifying patients with early breast cancer (EBC) at high risk of disease recurrence. Developed in collaboration with Eli Lilly and Company (LLY), it is the first IHC assay measuring Ki-67 expression to receive FDA approval in the context of treatment with Verzenio. The company expects to witness high demand in the coming months.
For the second quarter, ended July 31, 2021, A’s net revenue increased 25.8% year-over-year to $1.59 billion. The company’s income from operations came in at $412 million, representing a 37.8% increase from the prior-year period. While its non-GAAP net income increased 722.2% year-over-year to $337 million, its non-GAAP EPS increased 41% to $1.10. A had $1.43 billion in cash and cash equivalents as of July 31, 2021.
A’s EPS is estimated to rise 31.4% year-over-year to $4.31 in the current year. It surpassed the Street’s EPS estimate in each of the trailing four quarters. Analysts expect its revenue to be $6.32 billion for the current year, representing an 18.3% rise from the prior-year period. The stock’s EPS is expected to grow at a 11.7% rate per annum over the next five years.
Over the past six months, the stock has gained 19% in price to end yesterday’s trading session at $157.59.
A’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock has a B grade for Value, Stability, Growth, Quality, and Sentiment. Click here to see the additional ratings for A’s Momentum.
Of 58 stocks in the Medical – Diagnostics/Research industry, A is ranked #3.
Mettler-Toledo International Inc. (MTD)
MTD manufactures and markets precision, weighing, and analytical instruments for laboratory, industrial, packaging, logistics, and food retailing applications worldwide. The Columbus, Ohio, company also supplies end-of-line inspection systems used in food production and packaging, pharmaceutical, and other industries. It markets its products through its direct sales force and indirect distribution channels.
On March 24, 2021, MTD acquired PendoTECH, a pharmaceutical company that serves biopharmaceutical manufacturers and life science laboratories. The acquisition will expand MTD’s offering to include various sensors and software for measuring, monitoring, and collecting data, primarily in bioprocess applications. Combining MTD’s process analytics and PendoTECH’s products and technologies has the potential to create one of the most comprehensive sensor offerings in the bioprocess market.
MTD’s net sales for its fiscal second quarter, ended June 30, 2021, increased 33.8% year-over-year to $924.35 million. The company’s gross profit came in at $536.90 million, up 34.9% from the year-ago period. Its adjusted operating profit has been reported at $255.26 million, representing a 44.5% increase from the prior-year period. MTD’s net earnings came in at $184.76 million, representing a 46% year-over-year improvement. Its adjusted EPS increased 53.1% year-over-year to $8.10. The company had 142.25 million in cash and cash equivalents as of June 30, 2021.
Analysts expect the stock’s EPS to improve 28.1% year-over-year in the current year to $32.96. It surpassed the consensus EPS estimates in each of the trailing four quarters. The $3.67 billion consensus revenue estimate for the current year indicates an 18.9% year-over-year improvement. The stock’s EPS is estimated to grow at a 17.8% rate per annum over the next five years.
MTD has gained 12.6% in price over the past six months to close the last trading session at $1437.34.
MTD’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.
The stock has an A grade of Quality, and a B grade for Growth and Sentiment. Click here to see the additional ratings for MTD (Value, Stability, and Momentum).
MTD is ranked #4 of 58 stocks in the Medical – Diagnostics/Research industry.
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A shares were unchanged in after-hours trading Thursday. Year-to-date, A has gained 33.21%, versus a 22.51% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...
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