1、Equity Research 22 January 2019 CORE Barclays Capital Inc.and/or one of its affiliates does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.Inv
2、estors should consider this report as only a single factor in making their investment decision.PLEASE SEE ANALYST CERTIFICATION(S)AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 80.U.S.Life Science Tools&Diagnostics 4Q18 Preview:2019 Guidance in Focus as 4Q Trends Look Solid Looking into 4Q18,we believe
3、 2019 guidance is the most important datapoint for our Life Science Tools&Diagnostics coverage to deliver.Our channel checks and management commentary suggest that end market trends have remained solid into year end,which we believe helps improve near-term visibility for the group.Looking across the
4、 end markets,we believe biopharma will remain a growth engine,supported by R&D investment from elevated fundraising activity in 2018.Additionally,global support for academic funding should continue to drive LSD growth.Next,while industrial macro datapoints have been more mixed recently,we believe th
5、ere are still 2-3 quarters of visibility into end market momentum given longer-cycle nature of sales.Finally,while healthcare has sustainable long-term drivers of growth,we remain selective in Dx given recent challenges at the national labs.Looking across our coverage,6 of 20 companies have provided
6、 discrete 2019 guidance,and another 4 have provided color on their expectations for the upcoming year.So far,all end market commentary has screened consistent with our expectations.We believe the near-term outlook for Thermo Fisher(Top Pick,OW&$280 PT)has been de-risked following positive commentary
7、 at an industry conference on 1/8.Thermo Fisher has delivered 7.5%organic growth over the TTM-which the company has attributed to roughly 5%market growth and 2%from share gains.We believe the companys customer value proposition is resonating,as strength has been broad-based across its end markets an
8、d segments.Looking into 2019,CEO Casper noted that the company is focused on Share gain,share gain,share gain.We believe TMOs success is most notable in the Analytical Instruments segment,where mass spec growth rates have been superior to peers.Additionally,our Cryo-EM survey showed Thermo Fisher is
9、 driving a resolution revolution in structural biology,further strengthening the strategic rationale of the FEI acquisition.In China,CEO Casper noted that,“The China team feels good about how the year ended up and confident about what the market holds for the upcoming year.”We model 5.4%organic grow
10、th for 2019,toward the upper end of the companys long-term forecast of 4-6%.We also forecast adj.EPS of$12.30(vs the Street at$12.25),representing 11%growth y/y.Conversely,we continue to have a number of concerns with the Myriad Genetics(UW,$20 PT)thesis,which pose risks for FY2Q19 results and beyon
11、d.Starting with GeneSight,were concerned that the FDAs 11/1/2018 warning on pharmacogenetic testing could weigh on volumes.In addition,the Medicare documentation request from August poses a risk to both volume and reimbursement-potentially adding a burden for salespeople and psychiatrists to submit
12、orders.Finally,given our critical view of GeneSights clinical dossier as well as the APA negative guideline statement,we do not expect any incremental payor coverage.In hereditary cancer testing(HCT),we are concerned around potential disruption as Myriad consolidates the companys salesforce with Cou
13、nsyl-which took place in mid-November.Beyond that,we are looking for updates on the outstanding HHS investigations,and whether Myriad will adopt lower-priced NGS based codes Actions:We adjust our QIAGEN and Syneos models based on 2019 mgmt commentary.INDUSTRY UPDATE U.S.Life Science Tools&Diagnostic
14、s NEUTRAL Unchanged For a full list of our ratings,price target and earnings changes in this report,please see table on page 2.U.S.Life Science Tools&Diagnostics Jack Meehan,CFA+1 212 526 3909 BCI,US Mitchell Petersen+1 212 526 3367 BCI,US Andrew Wald+1 212 526 9436 BCI,US Barclays|U.S.Life Science
15、Tools&Diagnostics 22 January 2019 2 Summary of our Ratings,Price Targets and Earnings Changes in this Report(all changes are shown in bold)Company Rating Price Price Target EPS FY1(E)EPS FY2(E)Old New 18-Jan-19 Old New%Chg Old New%Chg Old New%Chg U.S.Life Science Tools&Diagnostics Neu Neu QIAGEN N.V
16、.(QGEN)OW OW 36.93 43.00 43.00-1.32 1.32-1.50 1.47-2 Syneos Health,Inc.(SYNH)EW EW 49.34 45.00 45.00-2.73 2.73-3.10 3.05-2 Source:Barclays Research.Share prices and target prices are shown in the primary listing currency and EPS estimates are shown in the reporting currency.FY1(E):Current fiscal yea
17、r estimates by Barclays Research.FY2(E):Next fiscal year estimates by Barclays Research.Stock Rating:OW:Overweight;EW:Equal Weight;UW:Underweight;RS:Rating Suspended Industry View:Pos:Positive;Neu:Neutral;Neg:Negative Barclays|U.S.Life Science Tools&Diagnostics 22 January 2019 3 TABLE OF CONTENTS In
18、troduction.4 Actions:Model Adjustments for QIAGEN and Syneos Health.4 Links to Barclays End Market Trackers and Surveys.5 Links to Takeaways from Industry Conferences.5 Links to Industry Expert Event Replays.5 Stock Price Performance and Valuation.8 1.Agilent(A)Overweight/Neutral,$80 PT.11 2.Bio-Rad
19、 Labs(BIO)Overweight/Neutral,$315 PT.15 3.Bruker(BRKR)Equal Weight/Neutral,$34 PT.19 4.Charles River Labs(CRL)Equal Weight/Neutral,$128 PT.22 5.Genomic Health(GHDX)Underweight/Neutral,$38 PT.25 6.Hologic(HOLX)Equal Weight/Neutral,$43 PT.28 7.ICON PLC(ICLR)Equal Weight/Neutral,$130 PT.31 8.IQVIA(IQV)
20、Overweight/Neutral,$140 PT.34 9.Illumina(ILMN)Overweight/Neutral,$370 PT.38 10.LabCorp(LH)Overweight/Neutral,$165 PT.41 11.Mettler Toledo(MTD)Equal Weight/Neutral,$625 PT.45 12.Myriad Genetics(MYGN)Underweight/Neutral,$20 PT.48 13.PerkinElmer(PKI)Equal Weight/Neutral,$90 PT.51 14.PRA Health(PRAH)Ove
21、rweight/Neutral,$115 PT.54 15.QIAGEN(QGEN)Overweight/Neutral,$43 PT.57 16.Quest Dx(DGX)Overweight/Neutral,$117 PT.61 17.Quidel(QDEL)Overweight/Neutral,$77 PT.64 18.Syneos Health(SYNH)Equal Weight/Neutral,$45 PT.67 19.Thermo Fisher(TMO)Top Pick,OW/Neutral,$280 PT.70 20.Waters(WAT)Equal Weight/Neutral
22、,$190 PT.74 Barclays|U.S.Life Science Tools&Diagnostics 22 January 2019 4 Introduction Looking into 4Q18,we believe 2019 guidance is the most important datapoint for our Life Science Tools&Diagnostics coverage to deliver.Our channel checks and management commentary suggest that end market trends hav
23、e remained solid into year end,which we believe helps improve near-term visibility for the group.Looking across the end markets,we believe biopharma will remain a growth engine,supported by R&D investment from elevated fundraising activity in 2018.Additionally,global support for academic funding sho
24、uld continue to drive LSD growth.Next,while industrial macro datapoints have been more mixed recently,we believe there are still 2-3 quarters of visibility into end market momentum given longer-cycle nature of sales.Finally,while healthcare has sustainable long-term drivers of growth,we remain selec
25、tive in Dx given recent challenges at the national labs.Looking across our coverage,6 of 20 companies have provided discrete 2019 guidance,and another 4 have provided color on their expectations for the upcoming year.So far,all end market commentary has screened consistent with our expectations.FIGU
26、RE 1 Summary of 2019 Guidance Commentary an Industry Conference Source:Refinitiv,Company Documents,Barclays Research Stock Rating:OW:Overweight;EW:Equal Weight;UW:Underweight;RS:Rating Suspended.Industry View:Pos:Positive;Neu:Neutral;Neg:Negative.For full disclosures on each covered company,includin
27、g details of our company-specific valuation methodology and risks,please refer to http:/ Actions:Model Adjustments for QIAGEN and Syneos Health QIAGEN(QGEN):we lower our 2019 adj.EPS estimate to$1.47(from$1.50)reflecting$0.03 of 2H19 dilution for the announced Formulatrix acquisition of ddPCR assets
28、.Our 2020 and 2021 EPS estimates remain unchanged,and we lift our 2022 forecast$0.05 to$2.30 to account for deal accretion as revenues from the target begin to scale.Provided Official FY2019 GuidanceCommentaryCompanyTickerRatingBarclaysStreet%DiffAgilent(Oct FYE)AOW$5,144$5,150-0.1%11/19,guided to$5
29、,130-$5,170mm of sales.Hologic(Sept FYE)HOLXEW$3,335$3,3130.7%On 11/7,guided to$3,290-$3,335mm of sales.On 1/7,announced a$23mm beat in FY1Q.ICONICLREW$2,764$2,785-0.7%On 1/8,guided to$2,735-$2,835mm of sales,5.2-9%growthIlluminaILMNOW$3,788$3,7800.2%On 1/7,guided to 13-14%sales growth($3.78bn at mi
30、dpoint)Mettler ToledoMTDEW$2,974$2,978-0.1%On 11/8,guided to 2%sales growth:5%organic-3%FXMyriad(June FYE)MYGNUW$856$860-0.5%On 11/6,guided to$855-865mm of sales,15.5-17%growthCommented on FY2019 GuidanceCommentaryCompanyTickerRatingBarclaysStreet%DiffGenomic HealthGHDXUW$429$439-2.2%DD sales growth
31、(Barclays=10%),op income 10%(Barclays=11%)LabCorpLHOW$11,419$11,506-0.8%Lab sales expected flat to down(Barclays=-2%).Very strong performance at Covance(Barclays=6%)Syneos HealthSYNHEW$4,663$4,686-0.5%Clinical sales up 4-6%(Barclays=5%),Commercial sales up 8-12%(Barclays=8%)Thermo FisherTMOOW$25,355
32、$25,1300.9%“End markets are strong.”2019 focus is on,“Share gain,share gain,share gain.”FX 2%headwindNo FY2019 GuidanceCommentaryCompanyTickerRatingBarclaysStreet%DiffBio-RadBIOOW$2,325$2,342-0.7%BrukerBRKREW$1,952$1,967-0.8%Commited to deliver at least 1 GHz class NMR systemCharles RiverCRLEW$2,460
33、$2,487-1.1%IQVIAIQVOW$10,888$10,8710.2%PerkinElmerPKIEW$2,892$2,918-0.9%PRA HealthPRAHOW$3,182$3,0883.0%QIAGENQGENOW$1,606$1,618-0.7%Reaffirmed expectation for$30mm of QIAstat-Dx sales in 2019(up from$7mm in 2018)Quest DxDGXOW$7,840$7,7581.1%QuidelQDELOW$549$5333.0%Expects 4%cardiac immunoassay sale
34、s growth(Barclays=5%)WatersWATEW$2,501$2,4930.3%Anticipates healthy end market activityFY2019 RevsFY2019 RevsFY2019 RevsBarclays|U.S.Life Science Tools&Diagnostics 22 January 2019 5 Syneos Health(SYNH):we lower our 2019 cash EPS estimate$0.05 to$3.05.Syneos revenue commentary at a recent investor co
35、nference was more bullish than our expectations,with gross clinical revenue expected up 4-6%(were now at 5%)and commercial revenue expected up 8-12%(were at 8%).That said,margin expansion guidance of+20-30bps was lower than our prior forecast of+50bp.The combination of these factors leads us to lowe
36、r our 2019 cash EPS forecast.Links to Barclays End Market Trackers and Surveys 2019 Outlook on 1/3/2019,“2019 Outlook:Tools&Dx a Relative Safe Haven,TMO Our New Top Pick”Biopharma End Market on 1/4/2019,“Biopharma M&A Brings Consolidation Risk Back into Focus for the CROs”Industrial End Market on 1/
37、4/2019,“Barclays Tools Industrial Tracker-December 2018:Moderating PMIs Weighs on Sentiment”Dx/Lab End Market on 1/9/2019,“Labs November 2018 Employment Trends Tracker”,on 11/20/2018,“Lab Survey Says:Share Themes Favor LH/DGX in 2019,Dx Trends Positive”,and on 1/11/2019,“Weekly Flu Clues:Influenza A
38、ctivity Takes Annual Post-NYE Dip”Links to Takeaways from Industry Conferences RSNA:11/29/2018:Jacks Tool Kit-Vol.4,Issue 48:RSNA Takeaways for Industry&HOLX AMP:11/5/2018:AMP 2018 Takeaways:Expanding QIAGEN MDx Menu in Focus Genetics:10/8/2018:Illumina:Takeaways from Field Trip to the Broad Institu
39、te:Increased Conviction in LT Trajectory for NGS AACC:8/3/2018:AACC 2018:Focus on Automation and Innovation 7/30/2018:AACC 2018 International Markets&Financial Analysts Briefing Takeaways ASMS:6/7/2018:Jacks Tool Kit-Vol.4,Issue 23:Takeaways from ASMS 2018 ASCO:6/4/2018:GHDX:TAILORx Shows Value for
40、Intermediate Risk Patients,Fully Valued in Stock War College:5/3/2018:Jacks Tool Kit-Vol.4,Issue 18:Lab Battle Lines Drawn at War College 18 Interphex:4/23/2018:Biopharma Channel Checks Improve Near&Long-Term Outlook for TMO Links to Industry Expert Event Replays 1/4/2019:MYGN GeneSight RCT Expert P
41、erspectives-Tool Time with Jack 6/7/2018:Oncologist Views on Dx Post-ASCO-Tool Time with Jack Expert Call#7 5/30/2018:OB/GYN Perspectives on Dx,GYN Surgical and Medical Aesthetics Tool Time with Jack Expert Call#6 5/10/2018:Psychiatrist Views on Myriads GeneSight-Tool Time with Jack Expert Call#5 5/
42、7/2018:NGS Industry Update&NovaSeq Survey-Tool Time with Jack Expert Call#4 5/3/2018:Labs&Diagnostics Industry Update-Tool Time with Jack Expert Call#3 4/30/2018:Medical Aesthetics Industry Update-Tool Time with Jack Expert Call#2 Barclays|U.S.Life Science Tools&Diagnostics 22 January 2019 6 4/20/20
43、18:Bioproduction Industry Update Post-Interphex-Tool Time with Jack Expert Call#1 2/13/2018:Lab Director Takeaways on Dx Platforms and Operating Environment 9/26/2017:Lab Director Takeaways on PAMA Impact to Labs&Dx Barclays|U.S.Life Science Tools&Diagnostics 22 January 2019 7 FIGURE 2 Barclays Fore
44、cast vs Consensus Source:Company Documents,Refinitiv,Barclays Research.*Note:IQVIA,Myriad Genetics,PRA Health,Quidel and Syneos Health represent Cash EPS.All other figures are adjusted(inc.Stock Comp)Next CY Q Rev($MM)BarclaysConsensusDeltaFY2018 Rev($MM)BarclaysConsensusDeltaFY2019 Rev($MM)Barclays
45、ConsensusDeltaFY2020 Rev($MM)BarclaysConsensusDeltaAgilent$1,272.0$1,271.80.0%Agilent(Oct FYE)$4,914.0$4,914.00.0%Agilent(Oct FYE)$5,143.8$5,166.2-0.4%Agilent(Oct FYE)$5,486.7$5,493.0-0.1%Bio-Rad$607.3$609.0-0.3%Bio-Rad$2,279.8$2,281.6-0.1%Bio-Rad$2,325.2$2,341.9-0.7%Bio-Rad$2,421.1$2,445.2-1.0%Bruk
46、er$543.6$545.9-0.4%Bruker$1,885.6$1,888.2-0.1%Bruker$1,951.6$1,967.2-0.8%Bruker$2,011.7$2,043.4-1.6%Illumina$865.0$862.40.3%Illumina$3,330.0$3,328.30.1%Illumina$3,788.4$3,812.1-0.6%Illumina$4,359.0$4,349.50.2%Mettler Toledo$801.6$807.0-0.7%Mettler Toledo$2,919.3$2,925.0-0.2%Mettler Toledo$2,974.2$3,
47、017.7-1.4%Mettler Toledo$3,149.7$3,178.0-0.9%PerkinElmer$743.7$746.6-0.4%PerkinElmer$2,765.9$2,770.1-0.2%PerkinElmer$2,891.7$2,917.6-0.9%PerkinElmer$3,092.2$3,099.7-0.2%Thermo Fisher$6,250.1$6,230.30.3%Thermo Fisher$24,101.1$24,080.00.1%Thermo Fisher$25,355.5$25,129.90.9%Thermo Fisher$26,789.3$26,53
48、3.31.0%Waters Corp$703.1$704.2-0.2%Waters Corp$2,408.0$2,407.70.0%Waters Corp$2,501.1$2,493.30.3%Waters Corp$2,628.0$2,611.50.6%Life Science Tools-0.2%Life Science Tools-0.1%Life Science Tools-0.5%Life Science Tools-0.2%Genomic Health$100.6$101.5-0.9%Genomic Health$390.1$391.0-0.2%Genomic Health$429
49、.1$438.7-2.2%Genomic Health$469.0$476.4-1.6%Hologic$831.0$816.91.7%Hologic(Sept FYE)$3,217.9$3,217.90.0%Hologic(Sept FYE)$3,335.2$3,322.70.4%Hologic(Sept FYE)$3,464.6$3,446.70.5%Myriad$216.1$216.7-0.3%Myriad(Jun FYE)$772.6$772.6N/AMyriad(Jun FYE)$855.6$863.7-0.9%Myriad(Jun FYE)$903.9$924.1-2.2%QIAGE
50、N$408.2$408.6-0.1%QIAGEN$1,507.0$1,511.5-0.3%QIAGEN$1,605.8$1,617.8-0.7%QIAGEN$1,746.0$1,758.7-0.7%Quidel$132.5$132.00.4%Quidel$522.2$521.60.1%Quidel$549.3$533.33.0%Quidel$620.4$568.49.2%Diagnostics0.2%Diagnostics-0.1%Diagnostics-0.1%Diagnostics1.0%Charles River Labs$591.8$590.70.2%Charles River Lab