Rayno Life Science Tools and Diagnostics: What’s Hot and Not?

It was a tough week in Life Science Tools and Diagnostics with many crosscurrents: debt ceiling uncertainty, earnings shortfalls, lackluster economic data and European debt crisis. The usual positive buzz from the AACC offered little support. We will provide an updated financial comparison of all stocks in our diagnostic/tools index at the end of Q2 earnings reports.

Here is a brief update on our diagnostics and tools focus stocks:

Positive News with Volatility

Cepheid (CPHD $38.05)– hottest stock in the sector near recent 52 week high of $40.98. Turned first profit in Q2 of $0.03 share vs loss previous Q $0.03 due to sales of GeneXpert DNA testing system. Beat Revenue forecast of $61M with $67M. Stock is up almost 30% since JY 21 earnings release so a little ahead of itself at 8.6 P/S.

Exact Sciences (EXAS $8.70)-Developer of molecular screening test for colon cancer. Trading near 52 week high of $9.43 and well above June lows in $7 range. Earnings update next week.

Luminex (LMNX $20.38)– Received FDA 510(k) approval for xTAG Respiratory Viral Panel including six major tests. Stock is just off 52 week high of $21.89. Earnings release August 8. Recently completed a $34M deal for EraGen Biosciences specializing in molecular diagnostics.

Neogen (NEOG $40.59)-Reported JY 26 with net income up 30% over previous year and revenues up 23% to $172.7M. Stock recently spike to $47 range with sell-off after earnings.Animal safety and Ag doing well.Forbes article yesterday

Sequenom (SQNM $7)-off recent highs of $8.71 and now at $7 June support level. Announced collaboration with Illumina (ILMN) for sequencing test for Down’s syndrome in pregnant women. Fidelity holds a 14.99% position in the stock and has been very aggressive in biotechnology this year. Earnings next week.

Correction Due to Earnings

Abaxis (ABX $25.39) stock off 9.84% due to lackluster growth. Net Income Q 2 down to $2.2M vs $3.6M last year. Revenues up 3%.

Alere (ALR $29.29)-Stock is in a downdraft off 52 week high of $41.18 and June low of $34. Downgraded by Wedbush today. Over $5B of debt and goodwill. Numerous acquisitions need to be consolidated with a new strategy.Q2 EPS at $0.46 vs est of $0.59. Guidance at $2.50-2.60 vs previous $2.64. Some analysts still say M&A is upside. Another bright side-trading at 1X sales.

Illumina (ILMN $62.23) Stock took a big hit from earnings call now trading off JY 52 week high of $79.40 but starting to recover .Outlook for 2011 is the issue. Still the leader in genetic tools and sequencing.

Qiagen (QGEN $16.93)Disappointing earnings although sales grew 7% and EPS grew to $0.23 but fell from previous Q $33.3 vs $38.5; and still looking for  a bottom in  stock after 15% correction. Need to digest acquisitions and long term strategy.

SeraCare (SRLS $3.80) CEO left the Company after disappointing earnings.Revenue of $11M for the quarter was a 15% decrease with $0.03 EPS. The Company will probably be sold.

Stocks also taking a significant hit over the  past month: LIFE  VIVO.

Strength and safety in BDX IDXX TMO.

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