Risks Associated with Caliper

Caliper Life Sciences (CALP - Analyst Report) reported Q1 cash EPS that were $0.02 lower than our estimate on revenue that exceeded our forecast. We lowered our FY08 cash EPS estimate accordingly. We increased our FY09 revenue and cash EPS estimates.

Management reiterated its GAAP revenue guidance for 2008. Risk exists in top line and execution. Our target price is based on roughly 1.2x FY08 revenue estimate.

CALP develops and commercializes life science instruments and related consumables and services for use in drug discovery and development and other life sciences research. Caliper makes specialized LabChips that miniaturize, integrate and automate laboratory functions, with the intention of enhancing the capabilities, and reducing the size of laboratories.

At its current price of $3.50 per share, CALP is trading at 1.2x our 2008 revenue estimate, which is at a discount to the average group multiple of roughly 1.8x. Although the company continues to benefit from the Xenogen acquisition, revenue risk remains and execution risk exists. 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.

Read the full analyst report on CALP