Stock is down over 18% at 3p near $16.5 on 7M shares

A “Pure Play “Immunohematology Diagnostic Company

Immucor announced Fiscal Q1 2011 results yesterday with a revenue shortfall of  (9%) on traditional reagents $49.621M vs $54.719M in Fiscal 2010. Total Consolidated Revenues were $83.6M, 1% above the same period last year. Gross margin was comparable at 71.3% vs 71.9% the prior year quarter.The revised outlook is now Revenues of $320-332M with gross margins of 69.5 to 71%. with diluted EPS in the range of $1.08-$1.19.

“A combination of factors contributed to our lower fiscal 2011 outlook, including the macroeconomic environment,” stated Dr. De Chirico. “While our financial results were not significantly impacted in the beginning of the economic downturn, it is now evident that an overall weakness in industry demand, particularly in the U.S. market, is negatively impacting both our reagent volumes and our instrument orders. We have been insulated from wider economic trends in the past through the consistent execution of our business strategy but recently we have not performed as planned.”

“We continue to believe in the growth opportunities generated by our innovative product offering,” stated Dr. De Chirico. “We are revising our approach in a number of areas to help us unlock those growth opportunities for the future.”

The Company was plagued with manufacturing and regulatory problems in the summer of 2009 which drove the stock down to the $14 level. With a market cap of  $1.43B at a stock price of $20.44 and taking a 15% hit tomorrow the valuation would be in the 4x Price/sales range. Revenue estimates are currently in the $350M range. The Company has an attractive franchise with good technology and positive cash flow of $28M. It now appears to be a value stock and we can see how analysts update their reports after the dust settles.

In today’s Conference call, management commentary was provided on the reduced revenue guidance. Industry demand for blood transfusion products is down 3-4% in the U.S. due to less elective surgery and better blood utilization by hospitals. Also Immucor is a leader in the automated blood processing and testing segment and has lost sales in the “traditional reagents” segment which does not require major equipment purchases. Thus competitors in the “manual” reagent market may be picking up market share.

Immucor is one of the three market leaders in blood transfusion testing, the others are JNJ/Ortho and Beckman(BEC)/Olympus. Another competitor is Biorad (BIO) which recently acquired Biotest of Germany. However these companies are highly diversified and immunohematology does not represent a major segment of their business.

There was very little collateral damage in other diagnostic stocks with Alera (ALR) and Orasure (OSUR) down on low volume.

80% of the shares are currently held by institutions and mutual funds. ValueAct Holdings LP of San Francisco has been accumulating BLUD stock and now holds 7.5M shares as of June 30. Immucor is the #9 dollar position in the $3.2B fund. Neuberger Berman holds 2.9M shares. The stock is currently in the Rayno Life Science Tools and Diagnostics Portfolio and was recommended at 20.

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