Should You Add IDEXX Stock to Your Portfolio Right Now?

IDEXX Laboratories, Inc.’s IDXX strong momentum in its CAG (Companion Animal Group) Diagnostics business places it well for growth in the upcoming quarters. It is also building its global commercial capability to sustain strong CAG Diagnostics recurring revenue growth. The company’s software solutions are facilitating growth by enhancing clinic workflows and promoting greater utilization of diagnostics. However, unfavorable solvency and broader macroeconomic headwinds pose risks for IDEXX’s operations.

In the past year, this Zacks Rank #2 (Buy) stock has surged 58.8% against the industry’s 5% fall and the S&P 500 composite’s 9.7% growth.

The renowned medical device company has a market capitalization of $33.8 billion. IDEXX’s earnings surpassed estimates in three of the trailing four quarters and missed on one occasion, delivering an average surprise of 0.8%.

Let’s delve deeper.

IDXX’s Tailwinds

CAG Continues to Perform Well: Over the past few quarters, CAG Diagnostics’ recurring revenue growth has consistently remained above sector growth levels. In the second quarter of 2025, worldwide CAG Diagnostics’ recurring revenues increased 7.5% organically, supported by an average net price improvement of approximately 4% and benefits from CAG Diagnostic instrument revenues increasing 62% organically, aided by inVue Dx placements.

Also, recurring revenue growth was driven by 11% international organic gains. Internationally, the growth can be attributed to the benefits of net price realization and continued solid volume gains. IDEXX also generated substantial revenues and margins from the sale of consumables used in IDEXX VetLab instruments.

Cloud-Based Software in Trend: The huge demand for medical services that clients see is what motivates IDEXX to develop its software solutions. Both individual and corporate customers, in particular, are attracted to these solutions as they become more concerned with leveraging software to standardize their processes at scale. IDEXX’s cloud-based products, including ezyVet, Animana, Cornerstone, IDEXX NEO, DVMAX PIMS (practice information management systems) and Web PACS (picture archiving and communication system imaging software), continue to be in high demand in response to this trend.

Meanwhile, the newly introduced Vello software solution experienced continued momentum with double-digit sequential growth in active users. Furthermore, the company is also building on the robust features of its customer engagement solution by integrating Greenline Pet, a digital platform acquired earlier in 2024.

Strong Global Performance: In 2023, the company expanded its operations in the United States for the first time in four years. Through these strategic investments, the company continues to strengthen its future growth prospects by delivering high-touch commercial engagement in the fastest-growing regions while maintaining strong business performance.

This expanded global commercial capability is yielding strong results overseas, with a notable 11% organic rise in international CAG diagnostic recurring revenues in the second quarter of 2025. International results continued to be driven by strong new business gains. The consumable gains were supported by double-digit growth in the global premium instrument installed base. The company is particularly witnessing strong global gains in consumable revenues, banking on robust growth across its Catalyst and inVue Dx.

What Concerns IDEXX?

Solvency Position: IDEXX closed the second quarter of 2025 with cash and cash equivalents of $164.6 million, flat sequentially. The company posted a corresponding short-term debt of $654 million, higher than the cash level. Meanwhile, long-term debt (net of the current portion) remained flat year over year at $450 million but was higher than the cash levels.

Factors Affecting the Bottom Line: In recent times, U.S. clinical visit growth levels have been constrained by the persistent staffing challenges at veterinary clinics and the cumulative impacts of broader macroeconomic challenges on consumers. Global macroeconomic conditions, including growing geopolitical complexities and supply-chain disruptions leading to unit cost increases of raw materials, could continue to adversely affect IDEXX’s results of operations. These challenges have affected the company’s supply-chain operations globally. With sustained inflationary pressures in the future, IDEXX may struggle to keep its cost of revenues and operating expenses in check.

IDXX Stock Estimate Trend

The Zacks Consensus Estimate for IDEXX’s 2025 EPS has remained constant at $12.55 in the past 30 days.

The Zacks Consensus Estimate for the company’s 2025 revenues is pegged at $4.23 billion. This suggests an 8.6% rise from the year-ago reported number.

Other Key Picks

Some other top-ranked stocks in the broader medical space are Masimo MASI, Phibro Animal Health PAHC and Envista NVST.

Masimo has an estimated long-term earnings growth rate of 12.5% compared with the industry’s 9.9%. Its earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 9.17%. MASI shares have rallied 29.6% against the industry’s 17.3% fall in the past year.

MASI sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Phibro Animal Health, carrying a Zacks Rank #2, has an earnings yield of 6.3% against the industry’s -0.3%. Shares of the company have surged 87.3% compared with the industry’s flat growth. PAHC’s earnings outpaced estimates in each of the trailing four quarters, with the average surprise being 27.9%.

Envista, carrying a Zacks Rank #2, has an estimated earnings growth rate of 15.2% for fiscal 2026 compared with the S&P 500 composite’s 11.7% growth. Shares of the company have rallied 11.3% compared with the industry’s flat growth. NVST’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 16.50%.

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This article originally published on Zacks Investment Research (zacks.com).

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