Bull of the Day: Affymetrix (AFFX)

Zacks

Headquartered in Santa Clara, California, Affymetrix (AFFX) is a leading provider of microarray-based products and services to the global research community. The company utilizes its DNA chip technology in areas of gene expression, analysis, and clinical application to help treat infectious diseases, cancer, and other ailments.
 
Affymetrix has 1,100 employees globally and has a sales and distribution network across U.S., Latin America, Europe and Asia.
 
The company has two reportable operating segments: Affymetrix Core (71.6% of revenues in Q1 2014) and eBioscience (28.4%).
 
Solid First Quarter Results
 
AFFX reported its Q1 results on May 1. Total revenue for the quarter was $83 million, up 6.4% from the same period last year, with strength in Genetic Analysis, eBio business units, and modest improvement in Expression business.
 
According to the management the business strengthened in both North America and Europe but results were mixed in APAC—with excellent growth in China, while Japan remained challenging.
 
Adjusted earnings for the quarter were $1.9 million or $0.03 per share, compared to a loss of $0.9 million or $0.01 a share in Q1 2013 and ahead of the Zacks Consensus Estimate by a penny.
 
Reported net loss was $10.5 million or $0.14 per share compared with a net loss of $15.4 million or $0.22 per share in the first quarter of 2013.
 
Positive Earnings Estimates Revisions
 
After better than expected results, analysts have revised their earnings estimates for the company in the past few weeks.
 
Zacks Consensus Estimates for the current year and the next year now stand at $0.16 per share and $0.20 per share respectively, up from $0.10 per share and $0.13 per share, 60 days ago.

The chart below shows the recent positive earnings momentum for AFFX:


 
The Bottom Line

Affymetrix recently reported profits for the first time since the first quarter of 2011. The company's restructuring plan to focus on high growth markets appears to be finally paying off as evident from the bottom- line growth in the reported quarter.
 
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