As a result of unexpectedly strong second quarter, earnings
estimates have been rising for Affymetrix (
sending the stock to Zacks Rank #1 (Strong Buy) with an
About the Company
Headquartered in Santa Clara, California, Affymetrix is a leading
provider of microarray-based products and services to the global
research community. The company utilizes its DNA chip technology in
areas of gene expression, analysis, and clinical application to
help treat infectious diseases, cancer, and other ailments.
Affymetrix has 1,100 employees globally and has a sales and
distribution network across U.S., Latin America, Europe and Asia.
Reports Earnings after Two Years
On July 31, 2013, the company reported its second quarter operating
results. The quarter resulted in net income of $2.8 million or
$0.04 per diluted share, compared to a net loss of $1.2 million or
$0.02 per diluted share in the same quarter of 2012. The results
were substantially better than the Zacks Consensus Estimate of a
loss of $0.01 per share. The company reported earnings for the
first time since the first quarter of 2011.
Thanks to stronger revenue and control of operating expenses, the
company generated $10.3 million in cash from operations. Further
they also reduced their senior-secured debt by about 25%. As a
result, the company ended the quarter with $44 million
Turnaround in the results was due to strong growth in Genetic
Analysis business and improvement in Expression Business. The
management said that the business strengthened in North America and
Europe while Japan remained soft. It appears that the company's
restructuring plan is finally working.
Positive Earnings Estimates Revisions
As a result of surprising turnaround in the operating results,
analysts have revised their earnings estimates for the company in
the past few weeks. Zacks consensus estimates for the current
quarter and the current year now stand at $0.02 per share and $0.08
per share respectively, up from a negative $0.01 per share each, 60
The Bottom Line
AFFX is a Zacks Rank#1 (Strong Buy) stock. The company also earned
a (longer-term) Zacks recommendation of "Outperform", based on its
improved prospects. Turnaround in the quarterly results
suggests that the worst may now be over for the company.
The company has highly innovative products and a number of
proprietary intellectual property licenses. It has so far failed to
monetize on them but new initiatives and shift of focus make it an
interesting pick at this time.
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AFFYMETRIX INC (AFFX): Free Stock Analysis
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