We maintain our Neutral recommendation on Luminex Corporation (NasdaqGS:LMNX - News). Second-quarter fiscal 2011 earnings of 11 cents a share outperformed the Zacks Consensus Estimates of 6 cents. Profit propelled more than five-fold year over year riding on solid double-digit growth in revenues.
Revenues zoomed 43% year over year on the heels of strong consumables sales. Consumable revenues skyrocketed 90% to hit a new quarterly record (of $18.4 million).
Healthy shipments of analytical instruments contributed to sustained double-digit growth in system sales.The company raised its sales forecast for the full year factoring in the contributions from its recently completed acquisition of EraGen Biosciences.
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 248 analyzers (including 62 MAGPIX analytical instruments) in the second quarter, resulting in total shipments of 8,145 analyzers, up 13% year over year.
Luminex possesses an extensive product portfolio and a healthy pipeline of novel assays, which are expected to support growth going ahead. The company, in July 2011, received the U.S. approval for its xTAG Respiratory Viral Panel (“RVP”) Fast assay. It has also received the European CE mark for its xTAG Gastrointestinal Pathogen Panel (“GPP)”.
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 recently completed its buyout of EraGen Biosciences for $34 million in cash. The acquisition provides the company a highly complementary portfolio of molecular diagnostic tests. Besides, it enables Luminex to tap new markets leveraging EraGen’s innovative technologies. Moreover, the company, in June 2011, inked a global sales and distribution pact with life sciences company Life Technologies Corporation (NasdaqGS:LIFE - News) for its MAGPIX instrument.
However, Luminex operates in the highly competitive life sciences industry. Moreover, the company is challenged by sluggish growth in its core markets, faces regulatory uncertainties, and depends heavily on partners to market its instruments and assays, a strategy that has its risks.
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