Mesa Labs surges 7% on Q3 earnings beat, profit swing
Quality control instruments maker reports $3.07 EPS vs $2.41 expected, declares dividend
Mesa Laboratories shares surged 7.2% to $86.31 on Tuesday after the quality control instruments maker swung to profitability and delivered quarterly earnings that sharply exceeded analyst expectations.
The Lakewood, Colorado-based company reported adjusted earnings of $3.07 per share for its fiscal third quarter, beating the consensus estimate of $2.41 by 27.4%. Revenue reached $65.1 million, surpassing analysts' projections of $63.2 million. The company generated net income of $3.6 million, a significant turnaround from prior-year results.
The earnings report marks a notable improvement for the maker of quality assurance solutions used in pharmaceutical, medical device, and healthcare industries. For the nine months ended December 31, 2025, net income more than doubled to $10.8 million, with diluted earnings per share rising to $1.95 from $0.94 in the comparable period.
"We are pleased with our third quarter performance, which reflects continued execution across our business segments," the company stated in its earnings announcement. "Our results demonstrate the strength of our diversified portfolio and the ongoing demand for our quality control solutions."
Performance across Mesa's four business segments was mixed, with strong growth in its sterilization and biopharmaceutical divisions offsetting weakness in clinical genomics. The Sterilization and Disinfection Control segment generated $24.9 million in revenue with 6% organic growth, while the Biopharmaceutical Development division delivered $14.4 million, up 17.5% organically driven by higher sales of peptides and immunoassays hardware.
However, the Clinical Genomics segment declined 7.1% organically to $11.8 million, primarily due to weaker demand in China. The company anticipates ongoing challenges in China through fiscal 2026 and into 2027 but expects to maintain profitability through strategic initiatives including sales force improvements and cost reductions.
The Calibration Solutions segment reported $14.1 million in revenue, down 2.5% organically, attributed to strong year-ago performance in renal care.
Beyond the earnings beat, investors responded positively to Mesa's improving balance sheet. The company repaid $8.7 million in debt during the quarter, reducing its net leverage ratio to 2.62. Operating income increased 38% to $7.98 million.
Mesa also announced a quarterly dividend of $0.16 per share, payable March 16, 2026, to shareholders of record as of February 28. The ex-dividend date is February 27.
Despite the strong quarterly results, analyst sentiment on Mesa remains cautious. The consensus rating among three analysts is "Reduce" with a price target of $83, according to MarketBeat data. Individual ratings include two "Hold" and one "Sell."
The stock remains well below its 52-week high of $154.03 but has recovered from its low of $55.21. With institutional ownership at 91.8%, Mesa's performance is closely watched by large investors. The company's forward price-to-earnings ratio stands at 35.2 times.
Looking ahead, Mesa said it expects to maintain its positive trajectory into the fourth quarter of fiscal 2026. The company's focus on quality assurance solutions positions it to benefit from ongoing regulatory requirements in pharmaceutical and healthcare sectors, though the China headwind in clinical genomics remains a near-term challenge.