IDEXX Laboratories is the global leader in veterinary diagnostics with 65% U.S. market share, operating a highly defensible razor-and-blade business model that generates ~$4.3B in recurring revenue with 31.6% operating margins. The company benefits from powerful secular tailwinds including pet humanization, aging pandemic-era pets, veterinary visit recovery, and international expansion opportunities, supported by an innovation pipeline led by breakthrough inVue Dx cellular analyzer technology that drives both volume and margin growth. Although the stock trades at a hefty premium multiple at just about 50x forward EPS estimates, this is quite normal, as the stock has always traded at a forward P/E over twice that of the S&P 500 average. As such, the current nominal P/E, in our view, is rational and justified given the incredible moat the company has and the certainty of earnings it generates. Shares have been flat since 2021 while earnings continue to compound. We interpret this as a coiled spring ready to pop.

Key Investment Points:

• Wide economic moat with sticky customers, recurring revenue model, and integrated software ecosystem creates sustainable competitive advantages

• Strong growth drivers: 10%+ historical revenue CAGR, 13% Q3 2025 organic growth, 2025 guidance raised, 135,000 instruments placed globally, and multi-year demand tailwind from aging pets beginning 2027

• Shares breaking out of 4-year sideways channel on strong Q3 earnings on accelerating vet visit recovery and margin expansion to 33-35%