Life Technologies Stays at Neutral - Analyst Blog
February 25 2013 - 2:00PM
Zacks
We recently reiterated our Neutral recommendation on
Life Technologies Corporation (LIFE), a global
biotechnology tools company. While we hold a favorable view
regarding Life Technologies’ Genetic Analysis sales that received a
strong boost from the Ion Torrent franchise; economic uncertainties
lowering discretionary spending, NIH funding cut and unfavorable
currency were the major headwinds for the company during the
reported quarter. The stock currently carries a Zacks Rank #3
(Hold).
Why at Neutral?
Life Technology’s fourth-quarter adjusted earnings per share
(EPS) of $1.11 remained in line with the Zacks Consensus Estimate
but were down 5.7% year over year. Adjusted revenues increased 4.5%
at CER to $999 million, ahead of the Zacks Consensus Estimate of
$990 million.
Life Technologies enjoys a strong position in the life sciences
market and we are impressed with the strong momentum of its Ion
Torrent franchise. Moreover, the company is working on expanding
its portfolio with several product launches.
In Feb 2013, a dozen new products for the Ion Torrent platform
were launched, aimed at expanding clinical research across the
globe.These new products enabled the Ion Torrent semiconductor
sequencing technology to expand 1,000-fold in just 2 years and gain
a 60% market share of benchtop sequencers.
Also, the recent acquisitions of BAC BV, Navigenics, Pinpoint
Genomics and Compendia along with new distribution agreements in
China and Chile would enable the company strengthen its diagnostics
franchise and extend its footprint in emerging markets.
However, Life Technology’s exposure to the U.S. government
funding is somewhere between 10% and 15%, depending on the level of
funding. The recent sequestration cuts (implemented with effect
from Jan 2, 2013) that curbed the NIH (National Institutes of
Health) budget by 8% are expected to restrict the company from
opting for medical innovations. Based on the NIH budget cut, the
company provided a conservative 2013 outlook.
Other Stocks to Consider
While we prefer to remain on the sidelines on Life Technologies,
other medical device stocks worth a look are Medical Action
Industries Inc. (MDCI), Given Imaging
Ltd. (GIVN) and Acadia Health Company
Inc. (ACHC). All these stocks carry a Zacks Rank #1
(Strong Buy).
ACADIA HEALTHCR (ACHC): Free Stock Analysis Report
GIVEN IMAGING (GIVN): Free Stock Analysis Report
LIFE TECHNOLOGS (LIFE): Free Stock Analysis Report
MEDICAL ACTION (MDCI): Free Stock Analysis Report
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