We have reaffirmed our Neutral recommendation on
) with a target price of $52.00.
The company's third quarter adjusted earnings of 92 cents per
share surpassed the Zacks Consensus Estimate of 89 cents but
missed the year-ago quarter's 94 cents. Revenues increased 1.4%
at CER to $911 million, ahead of the Zacks Consensus Estimate of
We are encouraged by Life Technologies' adoption of several
initiatives to develop its diagnostics franchise. The company
recently entered into a Master Development Agreement with
) for companion diagnostic projects, to work together in oncology
and other therapeutic areas. The collaboration with Bristol-Myers
is in line with the company's strategy to build partnerships with
pharmaceutical majors for companion diagnostic development
including participation in early-phase clinical trials.
We are also impressed with the company entering into a license
and supply agreement with Singapore based VelaDx in October 2012.
The latter will develop next generation sequencing-based, in
vitro diagnostic tests that will run on Life Technologies' Ion
Personal Genome Machine platform. Further, we are optimistic
about the company's companion diagnostic partnership with
) MAGE-A3 cancer immunotherapy. Life Technologies also
strengthened its diagnostics franchise with three recent tuck-in
acquisitions - Compendia Bioscience, Navigenics and Pinpoint
Meanwhile, as a result of Life Technologies' increasing focus
on emerging markets, this region now accounts for approximately
10% of total sales. The company has been experiencing growth in
its emerging markets as well as Asia-Pacific, where it is
currently expanding its operations.
After recording a temporary slowdown in its Greater China
business about a year ago, the company augmented its dealer model
and supplemented it with its own sales force. These efforts have
successfully restored operations in Greater China to normal
levels with high-teens growth. During the reported quarter, Life
Technologies completed the acquisition of Genewindows, a
distributor covering the Invitrogen brand reagent portfolio in
south and west China. Besides, Life Technologies expanded its
footprint further with the completion of its facility in Beijing
where it will manufacture advanced DNA testing solutions in a
cost effective way.
Life Technologies' Genetic Analysis segment sales received a
strong boost from the Ion Torrent franchise. The company is
satisfied with the progress Ion Torrent technologies has made so
far and expects the growth momentum to continue. This growth has
been supported further by the recent launch of Ion Proton system
in September with the company continuing to take additional
However, economic uncertainties which lowered discretionary
spending and unfavorable currency were the major headwinds for
Life Technologies during the reported quarter. The company
tightened its 2012 earnings outlook and expects organic revenue
growth at 2%.Our recommendation is backed by Zacks #2 Rank (Buy)
in the short term.
BRISTOL-MYERS (BMY): Free Stock Analysis
GLAXOSMITHKLINE (GSK): Free Stock Analysis
LIFE TECHNOLOGS (LIFE): Free Stock Analysis
To read this article on Zacks.com click here.