On Nov 29, we retained Luminex Corporation (LMNX) at Neutral, following its not-so-impressive third-quarter 2013 results. Although the company is facing several near-term hurdles, it has considerable growth opportunities in the long term.
Why the Reiteration?
On Nov 4, LMNX posted third-quarter 2013 adjusted earnings per share of a penny, which lagged the Zacks Consensus Estimate of 12 cents by a whopping 91.7%. Adjusted earnings were also down from the year-ago level of 10 cents per share.
Revenues inched up a mere 1% to $50.8 million, but were lower than the Zacks Consensus Estimate of $55 million. Molecular diagnostic-related reimbursement changes implemented by Centers for Medicare and Medicaid Services (CMS) have been adversely affecting the entire industry. This issue delayed an order for Luminex from one of its largest assay customers.
The company’s earnings have failed to beat the Zacks Consensus Estimate just once out of the last 4 quarters with an average negative surprise of 3.33%. Following the earnings release, the Zacks Consensus Estimate for 2013 plunged 77.3% to 10 cents per share. However, the same for 2014 decreased relatively less by 16.7% to 55 cents. Luminex currently has a Zacks Rank #3 (Hold).
Luminex remains cautious about the life science research (:LSR) market given that LSR focused partners have now agreed upon lower research budgets in the U.S. As a result, the company has lowered its 2013 revenue guidance to the range of $212−$217 million from the earlier guided range of $220−$230 million.
Nonetheless, these headwinds are considered to be temporary setbacks and the company is likely to benefit from new products and realignment initiatives in the long term. LMNX possesses a healthy pipeline and works on developing several new assays in conjunction with its acquired businesses.
Other Stocks to Consider
Investors interested in the medical instruments industry may consider stocks like Natus Medical Inc. (BABY), AngioDynamics, Inc. (ANGO), and CryoLife Inc. (CRY). While Natus sports a Zacks Rank #1 (Strong Buy), AngioDynamics and CryoLife hold a Zacks Rank #2 (Buy).