Clinical Diagnostic Companies 2013 Financial Metrics and Valuation Models

Diagnostics  Companies-After 2013 Financial Reporting

Stocks to Watch: Cepheid (CPHD), Exact Sciences (EXAS) , Orasure (OSUR)

  • Price to Sales (P/S) is the best metric of value as many companies in the sector are not profitable.
  • Molecular diagnostics and genomics are the strongest growth sectors e.g. Cepheid (CPHD), ResponseGenetics (RGDX).
  • Many stocks show a “topping effect” or are off their highs-momentum has eased.
  • Cepheid (CPHD) is one of the most expensive mid-cap players with limited earnings clarity.Potentially an acquisition for the big guys.
  • Exact Sciences (EXAS) valuation is totally dependent on FDA approval of their Cologuard CRC Test.
  • Point-of-Care rapid DX tests are in a growing market: Abaxis, Alere, Orasure and Quidel.
  • Orasure (OSUR) looks cheap on P/S and has new HIV and HCV Tests coming.
  • Hologic is in a restructuring mode with a new CEO. Last year they bought GenProbe.
  • Some of these stocks are long term M&A plays as per our previous picks: GenProbe, Immucor and SeraCare. ThermoFisher is a major acquirer and now large DX player.

See The Rayno Top Picks and stock performance: Rayno DX and Tools.

Big winners YTD are Nanostring Technologies (NSTG $19.81) up 15%, Illumina (ILMN $173) up 56.9%, and Vermillion (VRML $3.22) up 36.4%. Illumina (ILMN) is a tools  Company focused on DNA sequencing and is up a whopping 225% over one year. Illumina will be developing their sequencing technology for clinical diagnostic applications.

Stayed tuned for 2014 update and rebalancing of picks.

 Selected  Diagnostics Stocks-Financial Summary

Company Ticker Price Rev RevQ4 Rev Price 2014 P/S PE PEG P/B Market
My’11 2012 2013 2013 5-Mar RevEst Cap
GenProbe* GPRO 80 642 143 $-000- sold 66 576 5 64 1.9 700 $B
Abaxis ABAX 28 179 40.8 176.4 38.8 203 4.3 51 5 4.6 0.862
Alere ALR 36 2,710 772 3,030 37 3,080 1 n/a n/a 2 3
Cepheid CPHD 31 331 113.3 401.3 54.25 457 8 n/a n/a 13 3.67
ExactSci EXAS 4.15 1 4.1 14.4 22.6 442 n/a n/a 7.4 1
GenomHlth GHDX 26 236 68.8 259.2 26.6 280 2.9 n/a n/a 5.6 0.823
Hologic HOLX 2,160 612.4 2,490 21.6 2,475 2.4 n/a n/a 3 5.93
Immucor** BLUD 20 345 83.3 sold 27 n/a 5.5 21 2.2 n/a n/a
Luminex LMNX 20 203 55.2 213.4 19.3 231 3.4 115 4.3 3 0.792
Meridian VIVO 23 179 44.8 188.7 20.8 201 4.2 23 2.3 5.4 0.846
NanostringT NSTG New 10.1 $31.50 19.9 46.5 6.3 n/a n/a 7.4 0.295
Nanosphere NSPH 3.4 10 2.52 20 9.4 n/a n/a 4.4 0.188
Neogen NEOG 41 194 59.6 225 45.5 242.5 6.9 61 3 5.9 1.67
Orasure OSUR 89.4 28.8 98.9 8.17 104.6 4 n/a n/a 2.6 0.411
Qiagen QGEN 20 1,250 363 1,310 22 1,370 3.9 115 16 2 5.12
Quidel QDEL 15 156 50.2 175.4 29 199 5 139 8 4.6 0.995
Resp Genet RGDX 2 18.1 22.2 3.1 n/a n/a n/a 0.06
Sequenom SQNM 71.5 45.1 162.4 2.34 214 1.3 n/a n/a n/a 0.276
SeraCare# SRLS 3.7 46.2 11 sold 4 43.5 1.8 36 n/a 40 n/a
Techne TECH 81 312 84 330 89.4 353 9.4 29 2.3 3.8 3,330
ThermoFish. TMO 3470 13,090 126 16,740 2.7 36 2.5 2.7 45,350
** sold for $1.97B to TBG Capital #sold for $80M
* sold for $3.7B to Hologic Names in BOLD are on focus list

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