Affymetrix Upgraded to Neutral - Analyst Blog
June 26 2013 - 5:05PM
Zacks
On Jun 26, we upgraded genetic devices maker Affymetrix
Inc. (AFFX) to Neutral from Underperform, as we believe
that the company has reasonable upside potential going forward,
despite disappointing first-quarter results.
Why the Upgrade?
Affymetrix posted first-quarter 2013 adjusted loss per share of 1
cent, wider than the Zacks Consensus Estimate of break-even
earnings. However, it was narrower than the year-ago adjusted loss
per share of 3 cents. Revenues increased 19.5% (including the
eBioscience acquisition) year over year to $77.9 million but were
4.9%.lower than the Zacks Consensus Estimate of $82 million.
Following the release of the first-quarter results, the Zacks
Consensus Estimate for 2013 declined to a loss of 1 cent per share
from earnings of 5 cents per share. Moreover, the Zacks Consensus
Estimate of a loss for 2014 has also declined (down 50% to 6 cents
per share) significantly.
However, we believe that Affymetrix is ready for a turn around and
the worst days are over for the company. In the face of declining
demand for Affymetrix’ flagship GeneChip Expression products,
management’s strategy to transform into a company with a broad
reach in the high-growth markets for translational medicine,
molecular diagnostics and applied markets is encouraging.
New products, acquisitions, strategic agreements should propel
growth going forward. Additionally, the company’s restructuring and
debt reduction efforts should boost margins and profitability.
Meanwhile, we are aware of the fact that Affymetrix faces intense
competition and pricing pressure across its core markets and is
exposed to tight global academic spending environment. Hence, we
choose to remain on the sidelines regarding Affymetrix, as
evidenced by its Zacks Rank #3 (Hold).
Other Stocks to Consider
Other stocks in the Medical-Biomed/Gene industry that are currently
performing well include Biogen Idec (BIIB),
Targacept (TRGT) and Protalix
BioTherapeutics (PLX). All these companies carry a
Zacks Rank #1 (Strong Buy).
AFFYMETRIX INC (AFFX): Free Stock Analysis Report
BIOGEN IDEC INC (BIIB): Free Stock Analysis Report
PROTALIX BIOTHR (PLX): Free Stock Analysis Report
TARGACEPT INC (TRGT): Free Stock Analysis Report
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