IDEXX LABORATORIES INC /DE (IDXX): what the price requires
At today's price, IDEXX LABORATORIES INC /DE (IDXX) is priced for +35.7% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/IDXX
Headline
| Field | Value |
|---|---|
| Ticker | IDXX |
| Company | IDEXX LABORATORIES INC /DE |
| Current price | $563.08/sh |
| Composition | IDEXX VetLab consumables 35% / Rapid assay products 8% / Reference laboratory diagnostic and consulting services 33% / CAG Diagnostics services and accessories 3% / CAG Diagnostics capital - instruments 5% / Veterinary software, services, and diagnostic imaging systems 8% / Water segment revenue 5% / LPD segment revenue 3% / Other revenue 0% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 17.3% |
| Operating margin today | 32.3% |
| Margin compression implied | -15.0pp |
| Implied growth | 35.7% |
| Multiple paid | 32x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 10.6% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~6pp.
Reconcile: at the x-ray's 9.3% required return this reads ~27.6%/yr; the models below use their own rates.
How unusual the bet is: extreme
| Reference | Value |
|---|---|
| vs own history | +2.77σ |
| cohort percentile (of 112 peers) | 80 |
| sustained it ~5 years at this level | 27% |
| implied end-window share | 0% |
Valuation X-Ray
Every valuation family lands below the price. The price therefore requires assumptions beyond what those standard frames encode.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 3.81x | 5 | expensive |
| Earnings | 3.98x | 5 | expensive |
| Relative | 1.57x | 5 | expensive |
| Growth | 1.38x | 3 | expensive |
Families that call it expensive: Asset, Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.2%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $346.63 | 1.62x | yes | FCF base $1.2B, growth 13% (input: historical growth), terminal g 4.0%, WACC 9.1%, 6yr projection |
| DCF Exit Multiple | Growth | $599.34 | 0.94x | yes | Exit EV/EBITDA: 29.5x / 31.5x / 33.5x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $408.97 | 1.38x | yes | P/E 29.16x (blended: static sector reference 24x + trailing (TTM) 41x), scenarios: 24.1x / 29.2x / 34.2x (bear / base = reference held flat / bull), EV/EBITDA 20.66x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $147.71 | 3.81x | yes | BV/sh $19.41, ROE (TTM) 70.4%, ke 9.3% |
| Two-Stage Excess Return | Asset | $616.53 | 0.91x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $407.25 | 1.38x | yes | Rev $4.4B, growth 13% (input: historical growth; tapered), Terminal P/S: 6.6x / 8.0x / 9.4x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $357.99 | 1.57x | yes | EPS $13.59, growth 26% (input: historical EPS growth), PEG=1.56 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $110.21 | 5.11x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $1.11B × (1−22%) / WACC 9.1% → EPV (no growth) |
| Residual Income | Asset | $245.05 | 2.30x | yes | BV $19.41 + 5yr PV of (ROE (TTM) 70.4% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $77.04 | 7.31x | yes | √(22.5 × EPS $13.59 × BVPS $19.41) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $283.49 | 1.99x | yes | EBITDA $1.44B × sector EV/EBITDA 16.0x |
| FCF Yield | Earnings | $141.44 | 3.98x | yes | FCF $1083.5M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $133.11 | 4.23x | yes | SBC-adj FCF $1.02B (FCF $1.08B − SBC $0.06B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $438.50 | 1.28x | yes | EPS $13.59 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $31.22 | 18.04x | yes | BV $19.41 × (ROIC 14.7% / WACC 9.1%) |
| P/Sales Sector | Relative | $221.86 | 2.54x | yes | Revenue $4.45B × sector P/S 4.0x |
| PEG Fair Value | Relative | $509.63 | 1.10x | yes | EPS $13.59 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $146.92 | 3.83x | yes | EPS $13.59 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $249.5m |
| Net debt / NOPAT (after-tax) | 0.23x |
| Net debt / operating income (pre-tax) | 0.18x |
| Interest coverage | 37.6x |
| Share count CAGR (buyback) | -1.6% |
| Burning cash | no |
Bullet Takeaways
- IDEXX runs a razor-and-blade model in veterinary diagnostics: it places analyzers in animal clinics, then earns high-margin recurring revenue from the consumables, test kits, and reference-lab services those instruments pull through, a stream the company calls its recurring diagnostic revenue.
- The quality is exceptional: a roughly 32% operating margin, a return on equity above 70%, and a balance sheet with almost no net debt, which is why the stock commands a premium few healthcare names earn.
- The defining risk is demand sensitivity: recurring revenue ultimately depends on pets being brought to the vet, and a weak economy that trims discretionary pet spending would slow the visit volumes the company tracks closely.
Bull Case
IDEXX is a mature compounder, and reading it through that lens is what makes the premium intelligible. This is not a turnaround or a speculative bet; it is a dominant franchise that has been growing recurring revenue at double digits for years and just did it again. First-quarter 2026 revenue rose 14% as reported and 11% organically to $1,141 million, led by Companion Animal Group growth of 15%, and earnings per share rose 17% to $3.47. For a company this size to grow organic revenue at 11% is unusual, and it reflects a structural position rather than a cyclical bounce. On the strength of the quarter, management raised full-year 2026 guidance to $4.67 to $4.76 billion in revenue.
The moat is the installed base and the recurring revenue it generates. IDEXX places diagnostic analyzers in veterinary clinics, and while the instruments themselves are sold once, the company is explicit that the real economics come from the recurring stream: revenues from its VetLab consumables, SNAP rapid-assay test kits, reference-laboratory services, and maintenance agreements. Once a clinic standardizes on IDEXX instruments and workflow, it keeps buying the consumables that run on them, and the company's long-term growth depends on growing volumes at existing customers and adding new ones, both of which it is doing. CAG Diagnostics recurring revenue grew about 11% organically in the quarter, with growth in both the U.S. and internationally. That is high-margin, sticky, annuity-like revenue.
The financial profile is close to ideal, which is why only the growth lens reaches the price. Return on equity is above 70%, return on invested capital near 15% sits well above the cost of capital, and the operating margin runs about 32%. Net debt is tiny at roughly $249 million, a fraction of a single year's operating income, with interest coverage above 36 times, and the share count is falling at about 1.6% a year. The business converts its earnings to cash and returns it. The bull case for IDEXX is the bull case for any great compounder: a durable, recurring revenue base in a structurally growing market, run by a management team that keeps widening the lead, and worth paying up for because the static methods cannot price decades of compounding.
Bear Case
The external variable with the most leverage on IDEXX is one the company does not control: how often pets get to the vet. The recurring revenue that powers the model is downstream of clinic visits, and clinic visits are downstream of discretionary household spending on animals. IDEXX is candid about this in its own filing, warning that "A weak worldwide economy, or actual or perceived economic weakness in any significant geography, could result in reduced demand for our products and services", and it monitors patient-visit and clinic-revenue data precisely because that trend is the leading indicator of its own growth. Veterinary visit volumes have been a soft spot industry-wide in recent years, and the company's double-digit recurring growth has come more from price and test-menu expansion than from rising visits. If a recession or a sustained pullback in pet spending pushes visit volumes down, the volume half of the growth algorithm weakens, and the price assumes that does not happen.
The valuation has fully priced the franchise quality, which leaves no margin for disappointment. At $561.65 (as of June 27, 2026), no family of valuation method reaches the price. The asset and earnings-power lenses, which read book value and capitalize current profit, land near $77 to $245 per share. Peer multiples land near $222 to $408. Even the forward-growth models mostly fall short, with only the exit-multiple DCF reaching the price by holding today's elevated EBITDA multiple flat. The inversion makes the bet stark: to justify the price, IDEXX has to sustain very high growth for years, and the implied growth assumption is among the most demanding the model produces. When a stock is priced for sustained best-in-class growth, even a modest deceleration, organic growth slowing from 11% toward high single digits, can trigger a sharp multiple compression, because the premium was the growth.
Competition and pricing scrutiny are the slower-burning risks. IDEXX competes with Zoetis and other diagnostics and animal-health players, and its premium pricing depends on continued product differentiation; the company itself notes that its success depends on differentiating its products in a way that justifies a premium price. Any erosion of that differentiation, a competitor closing the gap on instrument capability or reference-lab turnaround, would pressure both volume and price. The downside is not financial fragility; the balance sheet is pristine and there is no solvency question. It is valuation risk in its purest form: a wonderful business priced for perpetual excellence, where the path to loss is not the company failing but the company merely growing a little slower than the price requires.
Valuation
The price is a bet on sustained, best-in-class growth from an already premium-priced compounder. The inversion reads the embedded growth as very high, among the most demanding assumptions in the model, sustained for years on top of a roughly 32% operating margin. For IDEXX, the relevant assumption is not margin expansion, the margins are already excellent, but the durability of double-digit recurring-revenue growth. That is a bet on the installed base continuing to compound and the veterinary diagnostics market continuing to expand.
How far the price sits from the methods is wide and nearly unanimous. The asset and earnings-power lenses, anchored on a thin book value of $19.41 per share against an extraordinary return on equity above 70%, land between roughly $77 and $245, because even a very high return on a small book generates a value below the price when no growth is credited. Peer multiples land near $222 to $408. The forward-growth models reach highest, but only the exit-multiple DCF, which holds today's roughly 31-times EBITDA multiple flat, reaches the price. The pattern is clear: the price is a bet beyond what any standard frame supports on current numbers, defensible only by crediting durable compounding the static methods structurally cannot price. The spread between the price and the static lenses is large, three to five times on the earnings-power methods, and that spread is the quality premium.
Solvency is a non-issue and reinforces the quality story. Net debt of about $249 million is a rounding error against $1.4 billion of trailing operating income, interest coverage runs above 36 times, and the share count is falling at about 1.6% a year as the company returns cash. There is no downside risk from the balance sheet whatsoever. The decisive number for IDEXX is not a valuation output; it is the durability of the recurring-revenue growth rate, because the entire premium rests on that growth persisting, and the variable most likely to interrupt it, veterinary visit volumes tied to discretionary pet spending, sits outside the company's control.
Catalysts
IDEXX reported first-quarter 2026 results on May 5, 2026, and raised its outlook. Revenue rose 14% as reported and 11% organically to $1,141 million, driven by Companion Animal Group growth of 15% as reported and 12% organic, and earnings per share increased 17% to $3.47. CAG Diagnostics recurring revenue grew about 11% organically, with roughly 11% growth in the U.S. and 12% internationally, reflecting net customer gains, volume gains, and expansion of the premium instrument installed base.
On the strength of the quarter, management lifted full-year 2026 guidance to revenue of $4.67 to $4.76 billion and adjusted earnings per share of $14.45 to $14.90. The forward watch items are the drivers of the recurring stream: the trajectory of veterinary clinic visit volumes, which the company tracks as a leading indicator and which has been a soft spot for the industry, and the continued expansion of the premium instrument installed base that pulls consumables through. Because the stock is priced for durable double-digit growth, the central question each quarter is whether organic recurring-revenue growth holds at its recent pace or begins to decelerate, since that growth is what the valuation depends on.
Peer Cohorts (Per Segment, With Filing Citations)
CAG (Companion Animal Group) (reported)
- ZTS (Zoetis Inc.)
- (no filing in the citation store)
- ELAN (Elanco Animal Health Incorporated)
- (no filing in the citation store)
- NEOG (Neogen Corporation)
- (no filing in the citation store)
- PAHC (Phibro Animal Health Corporation)
- (no filing in the citation store)
Water (reported)
- ZTS (Zoetis Inc.)
- (no filing in the citation store)
- ELAN (Elanco Animal Health Incorporated)
- (no filing in the citation store)
- NEOG (Neogen Corporation)
- (no filing in the citation store)
- PAHC (Phibro Animal Health Corporation)
- (no filing in the citation store)
- QGEN (QIAGEN N.V.)
- (no filing in the citation store)
- TECH (BIO-TECHNE Corp)
- (no filing in the citation store)
- LNTH (LANTHEUS HOLDINGS, INC.)
- (no filing in the citation store)
LPD (Livestock, Poultry and Dairy) (reported)
- ZTS (Zoetis Inc.)
- (no filing in the citation store)
- ELAN (Elanco Animal Health Incorporated)
- (no filing in the citation store)
- PAHC (Phibro Animal Health Corporation)
- (no filing in the citation store)
- NEOG (Neogen Corporation)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
IDEXX FY2025 10-K, accession 0000874716-26-000038 · IDEXX Q1 2026 earnings release, May 2026