Genetic products company, Affymetrix Inc. ( AFFX ) provided a
disappointing guidance for its 2013 first-quarter results, based on
available preliminary financial data. The company will report its
financial results on Apr 30, after market closes.AFFYMETRIX INC (AFFX): Free Stock Analysis
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Affymetrix expects revenues to be $78 million in the quarter,
which is significantly lower than the Zacks Consensus Estimate of
$83 million. It is expected to decline about 8% sequentially.
Revenues from the acquired eBioscience business contributed $19
million to total revenues. Excluding the impact of eBioscience,
revenues are likely to decline 9.5% year over year.
Management pointed to lower-than-expected gene expression product
sales across all regions, particularly Japan, which led to the
decline in sales. This offset healthy revenues from genotyping and
cytogenetics products and moderate contribution from
Further, Affymetrix had roughly $38 million cash-on-hand as of Mar
31, 2013, after redeeming the remaining $3.9 million of its 3.5%
convertible notes and prepaying $3.2 million of senior-secured
debt. With current senior secured debt of $70 million, debt
repayment is a primary objective of Affymetrix's management.
Affymetrix's debt-to-equity ratio is 59.7% compared with 7.1% for
its peer group.
Based on the disappointing preliminary results, the company
currently carries a Zacks Rank #5 (Strong Sell). Research and
development spending by Affymetrix's customers have fallen
considerably due to a weak macroeconomic environment coupled with
stringent government actions including budget cuts.
On the earnings front, the company's earnings have failed to beat
the Zacks Consensus Estimates once in the last 4 quarters with an
average negative surprise of 9.13%. However, it managed to meet
estimates in the fourth quarter of 2012 and beat it in the first
and third quarters. The current Zacks Consensus Estimate for
earnings per share for the first quarter of fiscal 2013 is 1
While we strongly recommend avoiding the stock, companies like
Osiris Therapeutics ( OSIR ),
Cleveland BioLabs ( CBLI ) and
Athersys ( ATHX ), all carrying a
Zacks Rank #1 (Strong Buy), are expected to do well in the