IDEXX downgraded at Stifel citing overly bullish Street forecasts

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A few days after Goldman Sachs upgraded IDEXX Laboratories (NASDAQ:IDXX), Stifel issued an opposite view on the animal health company this week, lowering its recommendation to Hold from Buy on weak vet visit data that analysts said paint an overly bullish 2022/23 forecast.

Citing channel checks, Stifel’s team led by Jonathan Block notes that vest visits continue to disappoint, and ongoing practice capacity constraints will prevent near-term volume gains while worsening macro issues will exacerbate the current challenges.

“When we walk the vet visit data over to our IDEXX model, we believe Street 2022/2023 numbers are too high, and we lower our estimates,” the analysts wrote, slashing the IDEXX (IDXX) price target to $415 from $500 per share.

Despite historical data supporting the resilience of overall Companion Animal goods and services expenditure during a recession, 2005-2011 PCE data in relation to Veterinary expenditures suggest future downside risk if the consumer backdrop worsens.

Arguing that the company’s compelling valuation on a three and five-year bases is “COVID-inflated,” the analysts note that the 15-year relative valuation indicates a different setup.

In its upgrade on Thursday, Morgan Stanley highlighted that IDEXX’s (IDXX) valuation stood below the 2015-19 average despite an attractive long-term revenue model.

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