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Understanding Bio-Rad’s Risk Factors
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Understanding Bio-Rad’s Risk Factors

Life science research and clinical diagnostic products provider Bio-Rad Laboratories, Inc. (BIO) recently delivered a robust set of third-quarter Fiscal 2021 numbers. Let’s look at BIO’s third-quarter performance and understand what has changed in its key risk factors that investors should know.

Revenue increased 15.4% year-over-year to $747 million, outperforming analysts’ expectations by $79.5 million. This growth came on the back of a 15.3% increase in the Life Science segment and a 15.5% increase in the Clinical Diagnostics segment.

The gross margin expanded to 58.6% from 56.7% a year ago. The strong operational performance coupled with changes in the fair market value of BIO’s holdings in Sartorius AG helped it post earnings of $3.71 per share against the year-ago figure of $3 per share. This improved bottom-line also enabled BIO to surpass the Street’s estimates by $1.23 per share.

The President and CEO of BIO, Norman Schwartz, remarked, “We are pleased with our performance in the third quarter, which reflected strength across many product lines. During the quarter, demand continued for products associated with COVID-19 testing and research, though at a more moderate level.

“As we head into the end of 2021, we will continue to build on the progress we have made during the first three quarters and expect to generate improved operating profit over 2020.” (See Insiders’ Hot Stocks on TipRanks)

Looking ahead, for Fiscal 2021, BIO expects currency-neutral revenue growth to be in the range of 12-13% and a non-GAAP operating margin of approximately 19.5%.

After an interaction with BIO’s top brass at the Wells Fargo Healthcare Conference in September, Wells Fargo analyst Dan Leonard said that the mid-term growth outlook for the company remains in place but could see changes depending on the business environment dynamics in the coming months.

Now, let’s look at what has changed in the company’s key risk factors.

According to the new Tipranks’ Risk Factors tool, Bio’s top risk category is Finance & Corporate, which accounts for 29% of the total 28 risks identified. In its recent third-quarter report, the company has added one key risk factor under the Finance & Corporate risk category.

BIO highlights that its current and future debt and associated covenants could restrict its future operations. Such restrictions may limit BIO’s ability to take advantage of potential business opportunities.

Additionally, BIO may be deemed an investment company due to the market value of its investment in Sartorius AG. Consequently, BIO may not be able to obtain additional financing until it is determined that it is not an investment company. Any inability to obtain additional funding may adversely impact BIO’s existing business, ability to grow business and to make acquisitions.

The Finance & Corporate risk factor’s sector average is at 39%, compared to BIO’s 29%. Shares are up 38.1% so far this year.

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