Martek Biosciences Corporation

Martek Biosciences Corp. (MATK - Snapshot Report) has patented two strains of microalgae that produce beneficial oils: docosahexaenoic acid, or DHA, and arachidonic acid, or ARA. Both DHA and ARA are important nutrients in infant development. DHA also has health benefits that extend throughout a person's life.

Martek's product, life'sDHA, is used as an ingredient in infant formulas, products for pregnant and nursing women, food and beverage products and dietary supplements. Life'sDHA, along with life'sARA, is found in over 90% of U.S. infant formulas. The acids are also added to infant formulas sold in over 70 countries.

Martek, a Zacks #1 Rank (Strong Buy) stock, is headquartered in Maryland and has operations in Colorado, Kentucky and South Carolina.

Martek Enters Into Agreements

On Sep 18, the company announced it had entered into a multi-year DHA and ARA license and supply agreement with Hero, a Swiss-based international food company that manufactures infant nutrition and cereals. Martek will serve as Hero's exclusive supplier for all of its DHA and ARA needs for infant formula.

On Sep 22, Martek also signed a multi-year agreement with Swiss-based Hochdork Nutricare for the use of ARA in China and some parts of Europe.

Similarly, on Sep 24, Martek inked a multi-year agreement with Grupo Ricap, a third-party manufacturer of infant formula, to supply DHA and ARA in infant formula products produced for pharmacies in Mexico and Guatemala.

Martek Raises Full Year Guidance

On Sep 5, the company reported third quarter earnings and provided guidance for the rest of the year. Martek is seeing strong growth from infant formula customers, especially internationally.

Earnings per share for fiscal 2008 are expected to be higher than previously announced, in the range of $1.06 to $1.09, a 65% increase over 2007. Revenues are projected between $349 million and $353 million.

Covering analysts raised estimates for the full year to be in-line with the company's guidance. Full year estimates are up 3 cents in the last 30 days to $1.08 per share.

Fundamentals

Martek has a forward P/E of 25.23. It has surprised on estimates 4 consecutive quarters on average of 15.46%. The company reports fourth-quarter earnings on Dec 10.