Luminex Retained at Neutral - Analyst Blog

Luminex Corporation’s (LMNX) third quarter 2012 adjusted earnings of $0.04 per share missed the Zacks Consensus Estimate of $0.07 per share and the year-ago earnings of $0.05 per share.

Revenues increased 10% in the reported quarter to $50 million, missing the Zacks Consensus Estimate of $52 million. Top line growth was led by strong assay sales.

Assay sales jumped 22% to $16.4 million, led by stronger demand for its advanced CE Marked gastrointestinal pathogen panel (GPP) and NeoPlex4 assays. Revenues from the System segment dropped 1% year over year to $8.6 million. The company shipped 271 multiplexing analyzers (including 127 MAGPIX systems) in the quarter, resulting in total life-to-date dispatches of 9,433 analyzers, up 12.7% year over year. Consumable sales increased 8% to $12.9 million. Royalty and all other revenues grew 3% and 10% to $7.7 million and $4.5 million, respectively.

Luminex revealed that the Defense Threat Reduction Agency (“DTRA”) has awarded the company with $11.6 million to develop a portable diagnostic device enabled with quick detection of bio-threat agents. The contract has a term period of more than three and a half years.

Luminex accomplished the takeover of U.S.-based diagnostic testing company, GenturaDx on July 11, 2012. The GenturaDx deal is in line with Luminex’s strategy of pursuing acquisitions to drive growth. Its technology when combined with Luminex’s MultiCode chemistry will enable the company to develop user-friendly advanced products for its customers.

Luminex possesses an extensive product portfolio and a strong pipeline of novel assays, which are expected to support growth going ahead. The company is awaiting Food and Drug Administration (FDA) approval for its GPP and NeoPlex4 assays to drive future growth. The company may benefit from its latest acquisitions if it maintains integration synergies.

However, Luminex operates in a highly competitive life sciences industry. The company competes with Affymetrix (AFFX), Life Technologies Corporation (LIFE) and Sequenom (SQNM), among others. Moreover, sluggish growth in its core markets as well as the ongoing European austerity measures are challenges faced by Luminex. We are currently Neutral on the stock, which carries a short-term Zacks #3 Rank (Hold).

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