We expect the Santa Clara, Calif.-based biomedical company
) to beat expectations when it reports 2013-fourth quarter
results after the closing bell on Feb 5.
Why a Likely Positive Surprise?
Our proven model shows that Affymetrix is likely to beat earnings
because it has the right combination of two key ingredients.
Positive Zacks ESP:
(Expected Surprise Prediction), the difference between the Most
Accurate Estimate of 8 cents and the Zacks Consensus Estimate of
7 cents, stands at +14.29%. This is a meaningful and leading
indicator of a likely positive earnings surprise for shares.
Zacks Rank #1 (Strong Buy):
Note that stocks with Zacks Ranks of #1, #2 and #3 have a
significantly higher chance of beating earnings. The combination
of AFFX's Zacks Rank #1 (Strong Buy) and favorable ESP makes us
confident of a positive earnings beat in the 2013-fourth quarter.
What is Driving the Better-than-Expected
We believe that AFFX is ready for a turnaround and the worst
days are over for the company. In the face of declining demand
for Affymetrix' flagship GeneChip Expression products,
management's strategy to transform AFFX into a company with a
broad reach in the high-growth markets for translational
medicine, molecular diagnostics and applied markets is indeed
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Shares of Affymetrix started escalating following its promising
third quarter results. The company posted adjusted earnings per
share of 5 cents in the third quarter of 2013, surpassing the
Zacks Consensus Estimate of 2 cents and rebounding from the
year-ago adjusted loss of 3 cents.
Revenues inched up 0.9% to $80.4 million, beating the Zacks
Consensus Estimate of $79 million. Product revenues improved 2.9%
to $74.8 million, while Service and other revenues dropped 18.8%
to $5.6 million in the reported quarter.
Gross margin increased 300 basis points (bps) to 55% from 52% in
the third quarter of 2012. However, on an adjusted basis, gross
margin rose 100 bps to 61%.
Other Stocks to Consider
Affymetrix is not the only bullish stock in the biomed/gene
medical industry this earnings season. We also see likely
earnings beats coming from the following industry peers:
): Earnings ESP of +14.29% and Zacks Rank #1 (Strong Buy).
Biogen Idec Inc.
): Earnings ESP of +9.01% and Zacks Rank #2 (Buy).
): Earnings ESP of +10.00% and Zacks Rank #2 (Buy).