Luminex Stays at Neutral - Analyst Blog
May 13 2011 - 1:27PM
Zacks
We maintain our Neutral recommendation on Luminex
Corporation (LMNX). Revenues and earnings for
first-quarter fiscal 2011 topped the Zacks Consensus Estimates.
Profit more than doubled year over year on the back of solid top
line growth.
Revenues surged 30% year over
year in the quarter led by strong consumables and assay sales.
Consumable revenues propelled 53% to touch a new quarterly record
(of $15 million), boosted by strong demand from the company’s major
partners.
Healthy shipments of analytical instruments contributed to
sustained double-digit growth in system sales. Better sales mix
supported gross margin improvement in the quarter. The company
backed its revenue forecast for fiscal 2011.
Texas-based Luminex develops and markets proprietary biological
testing technologies, which have applications across the life
sciences industry. Its proprietary open-architecture xMAP
technology enables fast, cost-effective and accurate conduct and
analysis of biological tests (bioassays).
Luminex continues to expand its xMAP technology-based installed
instrument base. The company shipped 197 analyzers (including 38
MAGPIX analytical instruments) in the first quarter,
resulting in
cumulative shipments of 7,897 (up 13% year over year).
Luminex possesses an extensive product portfolio and a healthy
pipeline of novel assays, which if successfully developed and
launched, would facilitate further growth. The company expects to
launch the RVP Fast assay in the U.S. and the NeoPlex 4 newborn
screening assay in Europe in fiscal 2011.
Moreover, Luminex has a strong international presence which has
helped it to expand its product portfolio and customer base. The
company’s collaborative agreements should also help expand the use
of its products/technology. Luminex, in February 2011, collaborated
with Massachusetts-based integrated health system Partners
HealthCare to discover novel biomarkers and develop clinical
assays.
However, Luminex operates in the highly competitive life
sciences industry, characterized by rapid and continuous
technological innovation. The company competes with
Affymetrix (AFFX), Life
Technologies (LIFE) and Sequenom
(SQNM).
Moreover, Luminex is challenged by sluggish growth in its core
markets, faces regulatory uncertainties, and heavily depends on
partners to market its instruments and assays, a strategy
that has risks.
Our recommendation on the stock is supported by a short-term
Zacks #3 Rank (Hold).
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