Heska Posts Surprise Quarterly Profit As Sales Pop 91%; Shares Gain 4%

Heska jumped almost 4.2% to close at $196.53 on Feb. 23 after the advanced veterinary diagnostic and specialty healthcare products provider swung to a surprise profit in the fourth quarter. Total revenue jumped 90.5% to $64.3 million year-over-year and topped analysts’ estimates of $53.09 million. Sales during the reported quarter were driven by a rise in active subscriptions and North America point of care (POC) lab consumables.

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Heska (HSKA) reported 4Q adjusted earnings of $0.72 per share, compared to earnings of $0.10 per share during the same quarter last year. Analysts had expected the company to report a loss of $0.22 per share.

North America segment revenue came in at $40 million in 4Q, up 29.3% year-over-year. Adjusted EBITDA margin increased by 220 basis points to 13.4%. (See Heska stock analysis on TipRanks)

Heska CEO Kevin Wilson commented, “We saw healthy growth driven by healthy end markets that continue to need more of what Heska has unique capability to offer, all of which forms a great foundation to continue to upscale revenue and profitability in this second half of our Act Two plan.”

For 2021, the company projects total revenue in the range of $225 million to $235 million. The adjusted EBITDA margin is anticipated to be 8%. Additionally, the number of active subscriptions is expected to reach 3,715.

Following the 4Q results, Piper Sandler analyst Steven Mah increased the stock’s price target to $220 (11.9% upside potential) from $157 and maintained a Buy rating. In a note to investors, the analyst said, “Heska’s business model has shown strong resiliency despite COVID-19 headwinds.”

Mah believes “the company is positioned for long-term sustainable growth with upcoming product launches, entry into cytology increasing international traction, plus ongoing strength in pet ownership trends extending into 2021.”

Heska shares have exploded almost 95% over the past year, while the stock still scores a Strong Buy consensus rating based on 3 unanimous Buys. That’s alongside an average analyst price target of $176, which implies downside potential of more than 10% to current levels over the next 12 months.

Additionally, Heska scores a “Perfect 10” from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.