We recently compiled a list of the 10 Best Pet Stocks To Invest In According to Analysts. In this article, we are going to take a look at where IDEXX Laboratories Inc. (NASDAQ:IDXX) stands against the other pet stocks.
Pet Industry at a Glance
The pet industry is a rapidly growing sector. It was valued at approximately $320 billion in 2023 and is projected to reach nearly $500 billion by 2030, according to Bloomberg Intelligence’s Pet Economy Report. This growth is driven by a rising global pet population and an increasing trend of pet humanization, where owners treat pets as family members and are willing to spend more on their care, including premium food and health services.
The report notes that the US is positioned to remain the largest pet market. In the United States, the market is expected to approach $200 billion by 2030, with significant spending on veterinary care and pet healthcare products.
Ann-Hunter Van Kirk, Bloomberg Intelligence Senior Biopharmaceutical Analyst and co-author of the report, noted that improved pet nutrition is contributing to longer lifespans for pets, which in turn drives up spending on healthcare for aging animals. Analysts expect this trend of increased spending on pet health to continue over the next decade.
Diana Rosero-Pena, Bloomberg Intelligence Consumer Staples Analyst and co-author of the report, highlighted a notable rise in consumer spending on pet products, predicting that the pet food market could grow by more than 50% by 2030.
Shopping Trends Among Pet Owners
In April 2024, Acosta Group released the results of a new study highlighting important insights into pet parents’ shopping habits. With two in three US households owning at least one dog or cat, spending on pet food, treats, and healthcare has become a significant part of household budgets. The study found that 96% of pet parents consider their pets family members, and 86% are willing to adjust their budgets to accommodate their pets’ needs. This presents a valuable opportunity for retailers and brands to target this large audience.
The study also highlighted key preferences among pet parents regarding food choices. 42% prioritize high-protein content for their pets, followed closely by 40% who focus on joint care and 38% who seek probiotics for gut health. Additionally, 36% of pet parents are interested in fresh, minimally processed foods. Brand loyalty plays a significant role in purchasing decisions, with 57% of dog owners and 59% of cat owners sticking to brands they have previously purchased. However, impulse buying is common, especially among millennials, with 58% influenced by in-store promotions. Most pet owners are turning to mass retailers, pet specialty stores, and online retailers for their pet care purchases, indicating a shift in how pet care products are accessed.
Overall, the pet industry remains a vital part of the global economy, driven by strong consumer attachment to pets and an ongoing commitment to their well-being.
Our Methodology
To compile our list of the 10 best pet stocks to invest in according to analysts, we reviewed our own rankings and consulted various online resources. From an initial pool of more than 20 pet stocks, we focused on the top pet stocks that analysts believe have the most potential for growth. We ranked the 10 best pet stocks to buy based on their average price target upside potential according to analysts as of October 29, 2024.
Additionally, we mentioned the hedge fund sentiment surrounding each stock, which was taken from Insider Monkey’s database of 912 elite hedge funds as of Q2 of 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Photo by Karlo Tottoc on Unsplash
IDEXX Laboratories Inc. (NASDAQ:IDXX)
Average Price Target Upside Potential According to Analysts: 27.28%
Number of Hedge Fund Holders: 41
IDEXX Laboratories Inc. (NASDAQ:IDXX) is a global leader in pet healthcare innovation and it ranks among the top 5 on our list of the best pet stocks to buy according to analysts. It is an American multinational corporation that is primarily engaged in the development, manufacture, and distribution of products and services for the companion animal veterinary, livestock and poultry, dairy and water testing industries. IDEXX Laboratories Inc. (NASDAQ:IDXX) specializes in veterinary diagnostics, software, and water microbiology testing.
In the third quarter of 2024, the company reported a revenue of $976 million, marking a 7% increase from the same quarter in the previous year. This growth was largely driven by a 7% rise in the Companion Animal Group (CAG) segment and a strong 13% increase in water testing revenue. The company’s veterinary software and diagnostic imaging systems also saw an 11% revenue boost, showcasing the demand for its high-quality products. Additionally, IDEXX Laboratories Inc. (NASDAQ:IDXX) reported earnings per share of $2.80, reflecting an 11% increase year-over-year and improved operating margins.
IDEXX Laboratories Inc. (NASDAQ:IDXX) continues to expand its offerings. The company reported nearly 700 pre-orders for the new inVue Dx Cellular Analyzer, with shipping expected to begin in the fourth quarter. This innovative tool provides valuable clinical insights that save time for busy veterinary staff, further enhancing the company’s reputation as a leader in veterinary solutions.
With strong financial performance and a clear focus on expanding its product lineup, IDEXX Laboratories Inc. (NASDAQ:IDXX) presents a compelling investment opportunity. The ongoing demand for its diagnostic tools and software solutions positions the company well for future growth.
Analysts are also bullish on IDXX. The 12-month median price target set by analysts indicates a potential upside of 27% from the current stock price.
According to Insider Monkey’s Q2 database of over 900 hedge funds, 41 hedge funds held stakes in IDEXX Laboratories Inc. (NASDAQ:IDXX). Baron Funds stated the following regarding IDEXX Laboratories Inc. (NASDAQ:IDXX) in its second quarter 2024 investor letter:
“Shares of veterinary diagnostics leader IDEXX Laboratories Inc. (NASDAQ:IDXX) detracted from performance. Foot traffic to veterinary clinics in the U.S. remains uneven, which will modestly hamper aggregate revenue growth. Despite this, IDEXX’s excellent execution has enabled the company to continue to deliver robust financial results. We believe IDEXX’s competitive trends are outstanding, and we expect new proprietary innovations and field sales force expansion to be meaningful contributors to growth in 2024. We see increasing evidence that long-term secular trends around pet ownership and pet care spending have been structurally accelerated, which should help support IDEXX’s long-term growth rate.”
Overall, IDXX ranks 5th on our list of the best pet stocks to invest in according to analysts. While we acknowledge the potential of IDXX as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than IDXX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.