Qiagen reported increased global demand for its instruments and consumables used in infectious disease testing in the fourth quarter. Cowen analysts noted the results largely beat expectations, but dryly added: "The bar was quite low."
In the results published Tuesday, Qiagen reported $413.5 million in quarterly revenue, up about 3%. Cowen noted estimates were downgraded following a third quarter miss.
Qiagen pointed out a tailwind triggered by the coronavirus outbreak in China, but opted against factoring it into its outlook for 2020. The Dutch firm is seeking a rebound after a year of missing expectations, restructuring and opting to remain independent despite buyout interest.
Qiagen limped through the back half of 2019, falling short of expectations in the third quarter and lowering its outlook for the final three months of the year. Along the way, Qiagen stopped work on its own next-generation sequencing instruments, opting instead to partner with Illumina, and carried out a review of strategic alternatives.
With Qiagen deciding to continue as a standalone business, despite receiving several "conditional, non-binding indications of interest" from potential buyers, the diagnostics business needs to find ways to thrive as an independent entity.
Events outside of Qiagen’s control may provide an early push to that effort. In disclosing Qiagen’s fourth quarter results, interim CEO Thierry Bernard said the company is seeing an "increase in global demand for instruments and consumables that can be used for infectious disease testing for the coronavirus."
The threat posed by the coronavirus now spreading out from China has ramped up since the end of the fourth quarter, meaning any commercial benefits for Qiagen will only become evident in its next set of financials. Qiagen chose not to factor the effects of the outbreak into its 2020 outlook, though, in light of "uncertainties and disruptions to macro business trends in China."
China was a big driver of the problems Qiagen encountered last year. Sales in the country fell 24% in the third quarter following the end of a NGS joint venture and a slowdown in distributor orders. Those issues bled into the fourth quarter, contributing to a 4% drop in revenues in Asia Pacific. Japan also dragged on Qiagen in the fourth quarter.
Qiagen expects China to continue to hold its business back throughout the first half of 2020, limiting global constant currency sales growth for the year to 4% or less. Analysts at Cowen said the revenue forecast is below expectations, although Qiagen is more bullish than expected about its earnings per share prospects.
Efforts to achieve and exceed those growth forecasts will take place against a backdrop of ongoing speculation about whether Qiagen will accept a buyout offer. Thermo Fisher Scientific was reportedly interested in buying Qiagen last year. While Qiagen ended 2019 by committing to life as an independent company, the Cowen analysts still see "upside potential via M&A."