Azenta beat quarterly expectations and announced a $1.5 billion share buyback program, leading AZTA stock to skyrocket to a three-month high Tuesday.
The company sells tools to keep drugs at cool temperatures during transportation and offers genomics services like next-generation sequencing and molecular genetics testing. Excluding the impact of Covid contributions, Azenta said its base business grew 12%.
Needham analyst David Saxon noted strength from Azenta's sample repository solutions segment. That business helps store lab samples and materials in a safe and sterile way. Meanwhile, Azenta's genomics business is recovering from a slowdown.
On today's stock market, AZTA stock soared 21.8% to 56.75. Azenta posted September-quarter results late Monday and briefly hit its highest point since August.
AZTA Stock: Covid Impact In Decline
During the fiscal fourth quarter, adjusted earnings came in at 16 cents per share. Earnings grew 33% year over year and beat expectations by 9 cents, according to FactSet. Sales also beat projections for $136.9 million but were roughly flat year over year. Sales totaled $137.6 million.
Covid had a $1 million sales impact on the quarter, down from $12 million in the year-ago period — reflecting lower demand for Azenta cold-chain transport solutions and products related to Covid tests and research.
Azenta also announced a plan to buy back $1.5 billion in AZTA stock. That plan includes at least $1 billion in common stock over the coming year, including a $500 million accelerated share repurchase program.
Evercore ISI analyst Vijay Kumar said the buyback makes determining a valuation for Azenta stock more challenging. This equates to roughly 27% of the current market cap being repurchased.
"This is by far the biggest repo we have seen in life sciences and raises interesting questions on the magnitude and timing of repo," he said in a report. "Management noted that it found share repo at current valuation as being the most attractive option relative to (mergers and acquisitions)."
Kumar has an outperform rating and 60 price target on AZTA stock.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
