High p/e offsets its bright outlook

Article Excerpt

IDEXX LABORATORIES INC. $624 is still a hold. The company (Nasdaq symbol IDXX; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 84.8 million; Market cap: $52.9 billion; Price-to-sales ratio: 16.8; No dividends paid; TSINetwork Rating: Average; www.idexx.com) makes equipment that veterinarians use to detect diseases in pets and farm animals. In the third quarter of 2021, sales rose 12.3%, to $810.4 million from $721.8 million a year earlier. That’s partly because the COVID-19 pandemic has increased demand for pets as more people work from home. Earnings gained 12.0%, to $1.96 a share from $1.75. The company’s outlook remains bright as consumers continue to spend more on their pets, particularly preventative care. However, the stock trades at a very high 74.8 times the $8.34 a share that Idexx will probably earn for all of 2021. That high multiple adds risk, as the stock could drop sharply if the company’s earnings start to slow. Idexx Laboratories is a hold. hold…