Luminex Misses Ests., Trims Outlook - Analyst Blog
October 30 2012 - 5:30AM
Zacks
Luminex
Corporation’s (LMNX) third quarter 2012 adjusted
(excluding one-time charges) earnings of 4 cents per share were
lower than the Zacks Consensus Estimate of 7 cents per share as
well as the year-ago earnings of 5 cents per share.
Profit generated was $1.7 million, down 13.1% from the prior-year
quarter, partly due to higher operating expenses associated with
the GenturaDx acquisition as well as income tax-related
expenses.
Revenues
Revenues grew 10% in the reported quarter to $50 million, missing
the Zacks Consensus Estimate of $52 million, primarily driven by
solid sales in the Assay business.
Assay sales jumped 22% to $16.4 million, led by higher demand for
its advanced CE Marked gastrointestinal pathogen panel (GPP) and
NeoPlex4 assays.
Revenues from the System segment dropped 1% year over year to $8.6
million. The company shipped 271 multiplexing analyzers (including
127 MAGPIX systems) in the quarter, resulting in total life-to-date
dispatches of 9,433 analyzers, up 12.7% year over year.
On a positive note, Consumable sales increased 8% to $12.9 million.
Royalty and All Other revenues grew 3% and 10% to $7.7 million and
$4.5 million, respectively.
Margins
Gross margin in third quarter 2012 was 70% versus 62.4% in the
prior-year quarter. Operating expenses were up 23.8% to $31.7
million, due to costs associated with the acquisition of GenturaDx.
Operating margin inched up to 6.7% from 6.2% in the prior-year
quarter.
Selling, general and administrative expenses (as a percentage of
sales) were higher at 39.8% versus 36.2% in the prior-year quarter.
Research and Development expenses were 21.4% compared with 17.6% in
the year-ago quarter.
Balance Sheet
Luminex ended third quarter 2012 with cash and cash equivalents
(including short-term investments) of $41.6 million, down 57% year
over year. Long-term debt was $2.1 million, down 24.8%.
Guidance
The company lowered its full year revenue forecast for 2012 to the
range of $200 million —$204 million from the earlier range of $205
million – $215 million. Uncertain budgetary environment, especially
in Europe has led the company to trim its 2012 outlook.
Recent Developments
Luminex completed its acquisition of U.S.-based diagnostic testing
company, GenturaDx on July 11, 2012. The GenturaDx deal is in line
with Luminex’s strategy of pursuing acquisitions to drive growth.
Its technology when combined with Luminex’s MultiCode chemistry
will enable the company to develop user-friendly advanced products
for its customers.
Luminex also announced that the Defense Threat Reduction Agency
(“DTRA”) has awarded the company with $11.6 million to develop a
portable diagnostic device enabled with quick detection of
bio-threat agents. The contract has a term period of more than
three and a half years.
Our View
Luminex possesses an extensive product portfolio and a healthy
pipeline of novel assays, which are expected to support growth
going ahead. The company is awaiting Food and Drug Administration
(FDA) approval for its GPP and NeoPlex4 assays to drive future
growth. The company may benefit from its latest acquisitions if it
maintains integration synergies.
However, Luminex operates in a highly competitive life sciences
industry. The company competes with Affymetrix
(AFFX), Life Technologies (LIFE) and
Sequenom (SQNM), among others. Moreover, sluggish
growth in its core markets as well as the ongoing European
austerity measures are challenges faced by Luminex. We are
currently Neutral on the stock, which carries a short-term Zacks #4
Rank (Sell).
AFFYMETRIX INC (AFFX): Free Stock Analysis Report
LIFE TECHNOLOGS (LIFE): Free Stock Analysis Report
LUMINEX CORP (LMNX): Free Stock Analysis Report
SEQUENOM INC (SQNM): Free Stock Analysis Report
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