Review of the Laggards
Celera (CRA $6.09) has been a laggard primarily because of disappointing results from the recent acquisition of Berkeley Heart Labs(BHL) which had reported sales $20M vs $24M in the previous quarter in 2009.Celera has a cumulative loss in the one billion range but the shareholder equity is $576M with $300M in cash. The stock is about 92% owned by institutions who may see it as a “value play” because of potential revenue improvements or a technological breakthrough.Recently the Company filed a PMA for a genetic test called KIF6 which is a marker for cardiovascular disease. Abbott is Celera’s marketing partner. The technicals show a trend toward bottoming. This stock is a long term hold with a small position only for those investors who are very patient or for traders.
Qiagen (QGEN $19.11) has underperformed but lately has crawled back to near $20 from its earlier 12 mo. low of $16.85. The Company is well positioned in tools and molecular diagnostics with strong test platforms and a focus on “personalized medicine” with companion diagnostics already submitted to the FDA.. Revenues for 2009 were about $1B and the current market cap of $4.5B gives QGEN a price to sales ratio of 4X. Sales growth is estimated in the 10% range with EPS moving up from 87 cents to $1.00/sh.The Company has shareholder equity of about $2.3B with over $800M of cash but $1.33B of goodwill.Still it can leverage its balance sheet for future acquisitions and recently bought an early stage German biomarker company. The stock is a strong hold or accumulate on weakness.
Gilead (GILD $38.64)
Gilead is a blue chip biotech and is in a steady recovery mode from its 52 week low of $31.73. Strong hold or accumulate more for the long term.