Martek Biosciences Corporation

Martek Biosciences Corporation (MATK - Snapshot Report) recently posted a solid fiscal first quarter and saw its share price gain upward momentum following the release of the results. Revenues, which increased by 18% year-over-year, were a record $82.9 million. Analysts lifted their earnings forecasts in response the strong quarter.

Full Analysis

Martek Biosciences Corporation engages in the development and commercialization of novel products from microalgae, fungi, and other microbes primarily in the United States. The company offers life'sDHA, a vegetarian source of the omega-3 fatty acid DHA for use in infant formula, perinatal products, foods and beverages, and dietary supplements; and life'sARA, a vegetarian source of the omega-6 fatty acid ARA for use in infant formula.

Its products include nutritional oils used in infant formula, nutritional supplements, and food and beverage fortification ingredients. The company's nutritional oils consist of fatty acid components, such as docosahexaenoic acid (DHA) and arachidonic acid (ARA). DHA and ARA enhance mental and visual development in infants, as well as enable proper functioning of brain and reduce the risk of cardiovascular disease.

As was the case when Martek posted fiscal fourth-quarter results, shares of MATK jumped on positive first-quarter numbers.

The company’s first-quarter report was released last week, which included record revenues of $82.9 million, an 18% increase on a year-over-year basis. Net income was $8.7 million, which soared past the previous year’s $2.8 million. On an earnings per share basis, the company posted 26 cents, which topped the consensus estimate of 22 cents.

Commenting on the quarter, Chief Executive Officer Steve Dubin said, "The results for the first quarter show a solid start to fiscal 2008 and reflect our continued execution of our business plan. During the first quarter, Martek increased overall and non-infant formula revenues and achieved margin, earnings and cash flow growth. Furthermore, several new customers launched products with life'sDHA(TM) and an existing customer included our nutritional oils in an expanded number of their products. These new launches, customer launches to date in the second quarter and the success of a number of products that have been introduced by some of our largest customers should bode well for growth in the non-infant formula categories in coming quarters."

The biotech issued a second-quarter guidance that ranges between 24 cents and 26 cents per share. Analysts responded by increasing their forecasts. Three out of four covering analysts upped second-quarter expectations from last week’s 23 cents per share to 25 cents. For the full year, three out of five analysts lifted last week’s projections of 94 cents per share to $1.01.

The company’s price/book of 1.7 translates into an appealing valuation and comes in well below the industry’s average of 2.6.