AACC Notes-Diagnostic Stocks and Rayno Model Portfolio

Here are some brief notes from our visit to the AACC in Anaheim and recent earnings reports.

Rayno Diagnostic and Tools Portfolio

Abaxis (ABAX)-under review– and Quidel (QDEL) report today.We added Quidel to our model portfolio on 6/16 at $12.40.The stock is trading at around $12 maybe anticipating dilution due to the $130M acquisition of Diagnostic Hybrids which has sales of $38M. Abaxis is looking attractive at this price $18 and a PEG ratio of 1.15.so earnings will be closely watched.

Iris(IRIS)-stock under review announced the $4.7M cash acquisition of a high complexity 10.000 sq ft CLIA certified laboratory. The acquisition will be dilutive to earnings in 2010 and 2011 estimated at -$0.09 -$0.11 per share. The laboratory does nor currently have revenue and one strategy is to leverage its NADiA platform technology to perform a prognostic prostate cancer test which is pending FDA clearance. Selling clinical tests through a central lab is a major strategy shift for IRIS as  their product sales growth is slowing and the stock is at a two year low under $10. The P/S ratio is about 1.7 with recent earnings of $0.03 in the current quarter. Expect other strategic actions from IRIS, maybe another acquisition.

Alera (ALR) formerly Inverness IMA. Reported earnings yesterday and the stock is up 2% to $28.25 but off its all time high near 40.Q2 Revenues were $523M compared to $438.7 of one year ago. Acquisitions contributed $62.5M in incremental revenues. North American Influenza sales took a big hit down to $0.6M compared to $14.6 M one year ago. GAAP Net Loss was $0.10 per share compared to $0.01 for Q2 2009. Long Term Debt is over $2B with Shareholder Equity of about $3.5B. The PEG ratio based on future forecasts is 0.73.

MicroFluidics (MFLU.OB).We added MicroFluidics to our portfolio on 7/6 at $0.77. The stock does not trade in any significant volume presumably due to the Abraxis deal and stock owned by insiders and 5% shareholders. Market Cap is under $10M.

The stock is very hard to buy in any volume under $1.00 and the bid/ask spread is wider than ever like $0.53/.0.90.

Neogen(NEOG)-we added Neogen to our portfolio on 7/2 and it is up 12.8% since that time.

Other companies in our coverage universe that will be reporting in the days ahead are : Celera(CRA) ,GenProbe (GPRO) and Seracare (SRLS).

NEXT: Biomarkers for Cardiovascular Prevention:Plenary Session for AACC

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