Caliper Life Science Risks Exist

Caliper Life Sciences, Inc. (CALP - Analyst Report) reported Q4 cash EPS that were $0.03 lower than our estimate on roughly in-line revenue. We lowered our FY08 revenue estimate to within the initial guidance and also lowered our FY08 cash EPS estimate.

Risk exists in top-line and execution. At its current price of $3.95 per share, CALP is trading at 1.3x our 2008 revenue estimate, which is at a discount to the average group multiple of roughly 1.7x.

Although the company continues to benefit from the Xenogen acquisition, revenue risk remains and execution risk exists. Management revealed its GAAP revenue guidance for the first quarter and initial GAAP revenue guidance for 2008. Based on expected product and service revenue of $24-$27 million, first quarter revenue is expected to be in a range of $26.5-$29.5 million. Based on expected product and service revenue of $132-$138 million, fiscal 2008 GAAP revenue is anticipated to be $142-$148 million.

The product and service revenue guidance represents growth of 5.4% for the quarter and 12% for the year at the midpoint of the respective ranges. Although new products and services have been launched, the company must execute sales and other programs according to plan to meet expectations. The company continues to make progress improving margins and reducing costs.

Given the top-line and execution risks, we believe CALP should continue to trade no better than in-line to the group. At roughly 1.5x our 2008 revenue estimate, our price target moves to $4.50.

Read the full analyst report on CALP.