Abaxis Well Poised on Solid Prospects, Competition Rife

On Dec 26, we issued an updated research report on Abaxis, Inc. ABAX. The stock currently carries a Zacks Rank #3 (Hold).

This manufacturer of portable Medical (human) and Veterinary (animal) blood analysis systems that provide clinicians with rapid blood constituent measurements in medical and veterinarian markets globally has outperformed the broader industry in the last three months. The stock has returned 12% compared with the industry’s 3.5% gain.

We are encouraged by the company’s strong performance in Veterinary consumables with contributions from hematology reagents, i-STAT cartridges, coagulation cartridges and rapid assays. Notably, Hematology reagent revenue performance was solid in North America and stronger in markets outside North America. We are also upbeat about the company witnessing an increase in sales of hematology instruments worldwide.

Solid sales of Piccolo instruments globally is also an encouraging sign for Abaxis. Per management, as healthcare delivery consolidates across the United States into these groups, networks and healthcare conglomerates, Abaxis’ Piccolo is perfectly positioned to capture the lion’s share of diagnostic tests market.

We are also upbeat about Abaxis expanding its portfolio of rapid test menu in the recent past.  The company had signed a partnership with the American Animal Hospital Association (AAHA) to develop a wellness testing initiative to improve veterinary blood work compliance and implementing preventive care. We believe successful expansion of the product portfolio will boost the top line and help foray into new regions. Moreover, the company plans additional product launches in fiscal 2018, including the VetScan FUSE connectivity system.

Meanwhile,  its new sales and marketing strategies have been boosting investor confidence. In this regard, in September, Abaxis started shipping VetScan UA, a urine chemistry analyzer.

On the flip side, Abaxis faces intense competition in both the Medical and Veterinary markets. The company competes against firms that have substantially greater resources on all fronts - financial, research and development (R&D) and operations and marketing. It competes primarily with commercial clinical laboratories, hospital clinical laboratories and manufacturers of bench top multi-test blood analyzers and other testing systems that health care providers can use on-site. Also, currency headwinds and contracting margins are other concerns.

Zacks Rank &  Stocks to Consider

Some better-ranked medical stocks include Bruker Corporation BRKR, Amedisys, Inc. AMED and Chemed Corporation CHE. Notably, Bruker, Amedisys and Chemed carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Bruker has a long-term expected earnings growth rate of 9.9%. The stock has rallied roughly 57.3% in a year.

Amedisys has a long-term expected earnings growth rate of 18.5%. The stock has skyrocketed 22.3% in a year.

Chemed has a long-term expected earnings growth rate of 10%. The stock has soared 50.5% in a year.

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