Genetic products company,
) recently provided its guidance for the third quarter 2012
results, based on available preliminary financial data. The company
will be reporting the results on October, 31 after market closes.
Affymetrix expects revenues to be roughly $80 million in the third
quarter of 2012, which is below the Zacks Consensus Estimate of $82
million. According to management, declining Euro as well as a
difficult global academic funding backdrop is adversely affecting
the gene expression and eBioscience unit, thereby constricting the
company's top-line growth.
The company's share prices dropped 3.1% on October 9, following the
disappointing guidance announcement. However, Affymetrix currently
retains a Zacks #3 Rank, which translates into a short-term Hold
rating. We have a long-term 'Neutral' recommendation on the stock.
Affymetrix further stated that the eBioscience business, although
integrating well into the company, did not perform up to the mark
in the quarter and expects it to contribute $18 million to total
revenues. The gene expression unit also disappointed. However,
Affymetrix anticipates cytogenetics and genotyping products to grow
at a double-digit rate in the reported quarter.
Overall, Affymetrix expects full year 2012 revenues to remain
either flat or marginally down, led by Affymetrix's exposure to the
volatile funding environment and weakening Euro. Research and
development (R&D) spending by Affymetrix's customers have
fallen considerably due to a weak macroeconomic environment coupled
with stringent government actions including budget cuts.
Additionally, following an interest and principal payment of $3.5
million on senior debt, Affymetrix forecasts to generate
cash-on-hand of $39.6 million (as of September 30, 2012). The
company had ended the year-ago quarter with cash and cash
equivalent of $32.4 million.
Affymetrix holds a leading position in the gene expression products
and services market. Along with
), it is one of the two major providers of microarray technologies,
primarily used in the field of genetic research.
The Zacks Consensus Estimates for the third quarter and full year
2012 are expected to be a loss of 3 cents and 12 cents per share,
Currently, Affymetrix is shifting its research and development
(R&D) focus from discovery and exploration markets to the
faster-growing validation and routine testing markets. The company
reckons cytogenetics and cancer research as promising areas for
expansion, representing market opportunities of roughly $200
million and $500 million, respectively.
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