We recently reiterated our Neutral recommendation on
Life Technologies Corporation
), a global biotechnology tools company. While we hold a
favorable view regarding Life Technologies' Genetic Analysis
sales that received a strong boost from the Ion Torrent
franchise; economic uncertainties lowering discretionary
spending, NIH funding cut and unfavorable currency were the major
headwinds for the company during the reported quarter. The stock
currently carries a Zacks Rank #3 (Hold).
Why at Neutral?
Life Technology's fourth-quarter adjusted earnings per share
(EPS) of $1.11 remained in line with the Zacks Consensus Estimate
but were down 5.7% year over year. Adjusted revenues increased
4.5% at CER to $999 million, ahead of the Zacks Consensus
Estimate of $990 million.
Life Technologies enjoys a strong position in the life
sciences market and we are impressed with the strong momentum of
its Ion Torrent franchise. Moreover, the company is working on
expanding its portfolio with several product launches.
In Feb 2013, a dozen new products for the Ion Torrent platform
were launched, aimed at expanding clinical research across the
globe.These new products enabled the Ion Torrent semiconductor
sequencing technology to expand 1,000-fold in just 2 years and
gain a 60% market share of benchtop sequencers.
Also, the recent acquisitions of BAC BV, Navigenics, Pinpoint
Genomics and Compendia along with new distribution agreements in
China and Chile would enable the company strengthen its
diagnostics franchise and extend its footprint in emerging
However, Life Technology's exposure to the U.S. government
funding is somewhere between 10% and 15%, depending on the level
of funding. The recent sequestration cuts (implemented with
effect from Jan 2, 2013) that curbed the NIH (National Institutes
of Health) budget by 8% are expected to restrict the company from
opting for medical innovations. Based on the NIH budget cut, the
company provided a conservative 2013 outlook.
Other Stocks to Consider
While we prefer to remain on the sidelines on Life
Technologies, other medical device stocks worth a look are
Medical Action Industries Inc.
Given Imaging Ltd.
Acadia Health Company Inc.
). All these stocks carry a Zacks Rank #1 (Strong Buy).
ACADIA HEALTHCR (ACHC): Free Stock Analysis
GIVEN IMAGING (GIVN): Free Stock Analysis
LIFE TECHNOLOGS (LIFE): Free Stock Analysis
MEDICAL ACTION (MDCI): Free Stock Analysis
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