Q2 Review of Pure Play Diagnostic Companies:Bargain Hunting in ABAX,GPRO,QGEN

see url Summary of Q2 Earnings and Valuation Metrics of Selected Pure Play Dx Companies

Company Ticker Price RevEst Q1Rev Q2Rev Price Mcap P/S PE PEG
5/18/11 $M Yr. $M 15-Aug $M
GenProbe GPRO 80 579 143 136 60 2900 5 29 2
Abaxis ABAX 28 157 37.5 36 23.9 544 3.46 41 2.3
Alere ALR 2360 567 25 2140 0.9 n/a 0.7
Cepheid CPHD 30.5 269 60.2 67 34.8 2180 8.1 847 17
GenomicHlth GHDX 25.85 207 49.8 50.8 24.6 728 3.5 101 3.8
Immucor* BLUD 20.3 345 83.3 85.6 26.8 1890 5.5 21 2.2
Luminex LMNX 20 183 43.3 47.6 21.6 911 5 83 2
Meridian VIVO 23.4 161 41 40.1 19.2 786 4.9 31 1.5
Neogen NEOG 40.6 194 42.2 22.8 36.9 860 4.43 38 1.7
Qiagen QGEN 20 1160 264 282 15.7 3700 3.2 29 1.3
Quidel QDEL 14.55 159 59.6 27.5 13.5 450 2.8 219 2.7
SeraCare SRLS 3.7 43.5 11 11 3.53 68.4 6.2 12 0.8
Techne TECH 80.5 323 76.3 78 73 2720 8.4 24 1.8
* sold for $1.97B to TBG Capital

The August meltdown has chopped considerable market value from many diagnostic companies, however top quality ABAX and GPRO are considerably off last weeks’ bottom so bargain hunting is on. Although the market is rallying for the third day today with the DOW and the S&P up over 1.5% many sales estimates have been cut among these players. If you are looking for “contrarian value”  ALR and QGEN might be a good place to start but the balance sheets are highly leveraged. We list GenProbe (GPRO) at the top as a “standard” as the Company was put up for sale in an auction and is a leading diagnostic Company with a good new product pipeline.

  • Seracare (SRLS) took a beating on missed revenues and CEO exit but we expect the Company to be sold for more than current market value.
  • Long term holds with M and A potential are ABAX GPRO LMNX and NEOG.
  • Cepheid (CPHD) is one of the most overvalued companies but favored by institutions and MO players. The stock has held up well over this difficult 2 month period.
  • VIVO and TECH are long term quality companies that pay dividends but are more likely to be buyers than sellers.
  • Immucor (BLUD) was acquired  for $1.97B at a reasonable valuation at 5.5 P/S and a PE of 21. Peak valuations of H2 2011 were undoubtedly due to M&A premiums driven by a number of deals (see below).

http://versatilegrannyflats.com.au/author/admin/ Leerink Swann published a Healthcare Sector Review for the period ending Aug 12 showing Life Science Tools and Diagnostics down 10% YTD with particular weakness over the past 3 months of about 20%. The best performing sector was S&P Biotech up 1.4%.S&P Healthcare overall was flat for the year. The Life Science sector is having a good day today with the source site Rayno Life Science Portfolio up 1.9%. Exact Sciences(EXAS) is a big winner up 13% on an analyst upgrade.

No comments yet.

Leave a Reply