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Why Is Luminex (LMNX) Down 18.5% Since Last Earnings Report?

Zacks Equity Research

A month has gone by since the last earnings report for Luminex (LMNX). Shares have lost about 18.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Luminex due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Luminex Q1 Earnings and Revenues Surpass Estimates

Luminex Corporation reported first-quarter 2020 adjusted earnings of 1 cent per share, beating the Zacks Consensus Estimate of a loss of 2 cents. However, the bottom line plummeted 85.7% from the year-ago quarter.

Revenues came in at $90.4 million, surpassing the Zacks Consensus Estimate by 6.9%. Moreover, the top line improved 9.7% on a year-over-year basis.

Total sample-to-answer molecular diagnostics revenues grew 38% from the prior-year quarter.

Segmental Analysis

System Sales

Revenues at this segment totaled $12.1 million, declined 23.1% from the year-ago quarter.

Consumable Sales

This segment accounted for $12.8 million of revenues, up 19.3% year over year.

Royalty Revenues

Royalty revenues totaled $13.3 million, down 6.4% on a year-over-year basis.

Assay Revenues

This segment reported revenues worth $43.7 million, up 25.6% on a year-over-year basis.

Service Revenues

Revenues in the segment amounted to $5.5 million, up 2.4% from the year-ago quarter.

Other

Other revenues came in at $2.4 million, up 87.8% from the prior-year quarter.

Financial Update

As of Mar 31, 2020, cash and cash equivalents totaled $43.1 million, down 27.2% from the year-end 2019.

Net cash used in operating activities for the three months ended Mar 31, 2020, came in at $7.2 million, compared with $7.1 million in the year-ago period.

Margins

Gross profit in the reported quarter was $50.3 million, up 9.9% year over year. Gross margin was 55.7%, expanding 10 (basis points) bps.

Research and development expenses totaled $11.9 million, down 20.8% year over year. Selling, general and administrative expenses in the first quarter were $33.9 million, up 7.8% year over year. Total operating expenses amounted to $48.7 million, down 2.5% from the year-ago reported figure.

The company reported operating income of $1.6 million, against the year-ago quarter’s operating loss of $3.6 million.

2020 Guidance

Luminex projects second-quarter 2020 revenue to be at or above $105 million.

The company remains confident to surpass the high end of its current full-year revenue outlook of $362 million but is unable to issue an updated guidance range at this moment due to the uncertainties surrounding the COVID-19 pandemic.

The company expects to present and updated full-year revenue outlook in its second-quarter earnings release.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 250% due to these changes.

VGM Scores

At this time, Luminex has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Luminex has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.



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