FRX Forest Road Acquisition Corp

Affymetrix Inc. (AFFX) announced its preliminary revenue guidance for the fourth quarter and full year 2013. Affymetrix’ shares gained over 11.5% on Jan 7 to end the day’s trading at $8.81 on the back of the optimistic guidance.

Affymetrix expects fourth quarter 2013 revenues around $91 million, representing an increase of 7.8% from $84.4 million in the year-ago quarter. Affymetrix’ fourth quarter revenue guidance includes a one-time licensing payment of $5.3 million from one of its partners. The company’s guidance is also well above the Zacks Consensus Estimate of $79 million.

We note that Affymetrix’ total revenues primarily consist of product sales and services and other revenues. The company’s product revenues include Affymetrix core consumable revenues, instrument revenues and revenues from eBioscience, which was acquired in Jun 2012.

Affymetrix expects its 2013 total revenues to be approximately $329 million, an increase of 11.3% from $295.6 million in the year-ago period. The company’s 2013 revenue guidance is slightly above the Zacks Consensus Estimate of $328 million.

We believe that the company is ready for a turnaround with the worst behind them. In the face of declining demand for its flagship GeneChip Expression products, management’s strategy of transforming Affymetrix into a company with a broad reach in the high-growth markets for translational medicine, molecular diagnostics and applied markets is indeed encouraging.

On the back of the positive guidance, Affymetrix was upgraded to a Zacks Rank #1 (Strong Buy) on Jan 8. Some other stocks worth considering include Forest Laboratories Inc. (FRX), WuXi PharmaTech (Cayman) Inc. (WX) and Gentium (GENT), all holding a Zacks Rank #1.

 
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