Bio-Rad 4Q Sales Top Estimates Driven By COVID-19 Demand

Bio-Rad Laboratories outperformed fourth-quarter earnings and sales estimates as the life science research and clinical diagnostic company benefited from strong demand for its COVID-19 products during the pandemic. Shares rose 2% in Thursday’s post-market trading session.

During the fourth quarter, Bio-Rad’s (BIO) revenue increased 26.5% year-on-year to $789.8 million, topping analysts’ expectations of $686.8 million. The company reported diluted earnings per share (EPS) of $4.01, beating the Street consensus of $3.29. Gross margin improved from 52.9% to 58.3% during the reported period.

Higher demand for Bio-Rad’s PCR product lines due to the COVID-19 pandemic led to a 73.9% year-on-year sales increase in the company’s life science segment to $428.5 million in 4Q. Meanwhile, sales at the company’s clinical diagnostics segment dropped 6.6% to $359.6 million.

Notably, the US Food and Drug Administration (FDA) on Feb. 11 granted emergency use authorization for Bio-Rad’s COVID-19, influenza A and influenza B RT-PCR test, which can discriminate between the three viruses.

Bio-Rad CEO Norman Schwartz said while many of the company’s markets are yet functioning at less than 100%, the demand for COVID-19 products exceeded expectations in 4Q and strict cost control led to improvement in operating profit for 2020.  

For fiscal 2020, Bio-Rad’s revenue increased to $2.55 billion from $2.31 billion year-on-year. Earnings jumped from $7.06 to $10.52 per share during the same comparative period.

Looking ahead to fiscal 2021, Bio-Rad forecasted currency neutral revenue growth of 4.5% to 5%. The company expects operating margin to be in the range of 16% to 16.5% (See Bio-Rad stock analysis on TipRanks)

On Feb. 5, Jefferies analyst Brandon Couillard  raised the stock’s price target from $660 to $725 (13% upside potential) and reiterated Buy rating. Brandon noted that the market seemed to have overlooked the ~25% jump in Sartorius stock in the past year which adds $2 billion to Bio-Rad’s stake in the company. He sees a compelling safety margin in the stock at the current level.

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