IDEXX Labs In The Hot Seat: Analyst Forewarns Dwindling Vet Visits Amid Macro Headwinds Ahead

Stifel analyst Jonathan D. Block reiterated a Hold rating on IDEXX Laboratories, Inc. IDXX, lowering the price target to $500 from $525.

IDEXX is capturing market share across multiple modalities, international momentum generally is increasing, and diagnostics in the veterinary office will likely continue to play an increasingly important role, notes the analyst. 

However, the analyst's survey diligence points to vet visit growth under pressure, and the analyst believes that ongoing practice capacity constraints may prevent near-term volume improvements. 

At the same time, further macro deterioration could exacerbate the current challenges, Block cautioned.

The analyst adds that IDEXX's 2024 CAG Dx Recurring organic revenue may land around +10%.

While predicting IDEXX to have 2024 pricing power than investors realize, the analyst continues to expect a relatively modest veterinary visit environment. 

Finally, for the IDEXX premium, the analyst sees the 2024 contribution again falling <5%, below the company's historical pre-COVID average.

The new/unknown POC analyzer should aid the IDEXX premium, but the year one contribution from the analyzer'sanalyzer's recurring consumable will likely be muted as it takes time for the new POC offering to build a base of systems, which in turn drives a more significant consumable contribution over time. 

Going ahead, the analyst projects a 2024 price increase of around +5%, and if so, the price may again be the most significant contributor to IDEXX's growth algorithm in 2024, the analyst adds. 

For 2024, Block expects visits to improve and turn positive, but only modestly, as labor headwinds continue and the recent pullback in wellness is a concern. 

The analyst expects 2024 visit growth of around +1%.

Price Action: IDXX shares are trading lower by 1.56% to $454.86 on the last check Friday.