Diagnostics Company Stocks Are Off Their 2013 Highs
Life science tools and diagnostics stocks are near all time highs despite stretched valuations because of a strong secular biotech bull market and perceived synergy with biopharmaceuticals. Key themes are point of care testing, companion diagnostics and molecular diagnostics. Here is a rundown of the top 5 winners and losers. Note the only real loser in the DX portfolio was Sequenom (SQNM) . All other stocks could have been sold much higher near their July tops. Weaker than expected earnings have caused some stocks in the Portfolio to weaken. See our DX and Tools Portfolio picks and stock history in our July 1 posting.
Alere (ALR $31.40) up 69.73% 2013 High $35.38
ThermoFisher (TMO $90.42) up 41.77% 2013 High $91.72
Quidel (QDEL $25.52) up 36.7% 2013 High $29.75
Response Genetics (RGDX $1.88) up 35.25% 2013 High $2.30
Neogen (NEOG $54.25) up 19.7% YTD 2013 High $60.98
Illumina (ILMN $77.69) is not included but it is a top pick and up 40% YTD.
Vermillion (VRML $2.21) a speculative pick is up 67% YTD and hit a high of $4.07.
We are still reviewing notes from the AACC Meeting including three companies: Nanosphere. Nanostring and Meridian.
Sequenom (SQNM $2.91) down 38% 2013 High $5.36
Cepheid (CPHD $35.02) up 3.42% 2013 High $40.72
Abaxis (ABAX $40.24) up 8.46% 2013 High $51.84
Hologic (HOLX $22.62) up 13% 2013 High $23.96
Qiagen (QGEN $21) up 15.76% 2013 High $22.20
The overall portfolio stock selection has been made on the basis of strategic positioning, value, sales growth, product line and management. Many of these diagnostic stocks look overvalued on the basis of PE and PEG, however revenue growth, product positioning and M&A potential are important considerations. In the past, 5 of our picks have been acquired at a premium to market.
Q3 earnings are not expected to beat estimates and there are concerns about test reimbursement that should play out in Q4 when more CMS guidelines are published.
Here are the metrics after Q2 Earnings:
|** sold for $1.97B to TBG Capital||#sold for $80M|
|** sold for||$3.7B to Hologic||Names in BOLD are on focus list|