On Feb 20, we issued an updated research report on Luminex Corporation LMNX. A weak fourth quarter and stiff competition in the Medtech space currently plague the company.
The stock currently carries a Zacks Rank #4 (Sell).
What’s Deterring the Stock?
Luminex saw some sluggishness in the recently-reported fourth quarter of 2018.
Earnings per share in the fourth quarter dropped on a year-over-year basis. Per management, the departure of LabCorp impacted results.
Additionally, Luminex’s assay and molecular diagnostic revenues declined year over year in the quarter, impacted by LabCorp. Notably, assay revenues fell 11.7%, while molecular diagnostic revenues declined 11% year over year.
Moreover, Luminex’s Other segment saw a revenue decline of 14% year over year in the quarter.
In addition to this, Luminex operates in the highly competitive life sciences industry. The industry is characterized by rapid and continuous technological innovation. Currently, it is facing significant competitive headwinds in the respiratory market.
The company’s dependence on its partners for revenue generation may add to the woes. Luminex’s customers include clinical diagnostic, pharmaceutical, biotechnological, chemical and industrial companies. Reduced spending on research and diagnostics by these companies is likely to dent demand for Luminex’s products.
Despite the hurdles, shares of Luminex have rallied 28.1% compared with the industry’s 10.1% gain over the past year. The current level also compares favorably with the S&P 500 index’s 3% rally.
Some better-ranked stocks in the broader medical space are Penumbra, Inc. PEN, Wright Medical Group N.V. WMGI and DexCom. Inc. DXCM. Notably, each of these stocks currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Penumbra’s long-term earnings growth rate is expected at 20%.
Wright Medical’s long-term earnings growth rate is expected at 11%.
DexCom’s next-quarter earnings per share are projected to grow 56.3%.
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