Morningstar | Bio-Techne Posts Impressive Growth in Fiscal 2Q Results
Bio-Techne reported solid fiscal second-quarter results, and we may slightly increase our fair value estimate as we take a second look at our revenue growth forecast. The company posted impressive 11% organic growth during the quarter on an already difficult year-over-year comparison. The growth also appears broad-based, with double-digit growth in many critical instrument categories, like Western blot and ELISA. Based on recent results, we think the company will probably exceed our 10% organic growth forecast for the fiscal year. While the integration of acquisitions like Exosome have also limited reported margin expansion, underlying adjusted margin expanded nearly 260 basis points from last year when adjusting for acquisitions. This quarter’s results help build our confidence in management’s execution and recent capital allocation decisions, so we plan on keeping our narrow moat rating in place.Bio-Techne’s protein sciences segment, which incorporates the larger legacy operations of the company, has sustained impressive growth. This segment benefited in particular from over 20% growth in antibodies, and we expect the demand for higher-quality materials can sustain this division’s trajectory.
While the diagnostics and genomics segment posted 2% organic growth on a tough comparison to last year and likely ongoing issues from some of the older glucose monitoring sensors, we’re encouraged by the growth potential from management’s portfolio construction in this segment. The early 2019 inclusion of Bio-Techne’s early-detection prostate test, Exodx, as a recommended test in clinical practice guidelines from the National Comprehensive Cancer Network is a first step in broader adoption of this product. Following the likely approval of this test from Medicare, this prostate business has the potential to rapidly expand over the coming years.
Bio-Techne and its subsidiaries develop, manufacture and sell biotechnology life science reagents, instruments and services for the research and clinical diagnostic markets.Co.'s segments: Protein Sciences, which developes and manufactures purified proteins and reagent solutions, cytokines and growth factors, antibodies, immunoassays, biologically active small molecule compounds, tissue culture reagents and T-Cell activation technologies; and Diagnostics and Genomics, which develops and manufactures diagnostic products, including Food and Drug Administration-regulated controls, calibrators, blood gas and clinical chemistry controls and other reagents for Original Equipment Manufacturer.
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