Good Flow for BLUD Shares

A number of positive trends and developments make us optimistic about blood-testing products maker Immucor, Inc.’s (BLUD) growth. Gross margins are expected to regain momentum from the eventual growth in reagent sales, manufacturing efficiencies, and price increases.

The additional worldwide placements of Galileo (a walk-away instrument that can process up to 224 different samples at one time), the launch of a third-generation Galileo called Echo and the development of another version of Galileo work in favor of Immucor. Despite being dilutive during development of the technology, the pending acquisition of BioArray Solutions can transform Immucor into a leader in molecular diagnostic systems for blood transfusions.

At its current price of $26.23 per share, BLUD is trading at roughly 28x our fiscal 2009 earnings estimate of $0.95 per share, which is roughly in-line to the group multiple. Although continuing to grow, revenue may fall below expectations due to lower than anticipated sales from the customer loyalty program and Europe. In addition to revenue growth, gross margin expansion and operating cost control have been driving earnings higher.

We expect some downward pressure on the stock from the U.S. Federal Trade Commission inquiry announced in the second quarter. We believe the stock is fairly valued at roughly 34x fiscal 2009 EPS estimate. Our target price remains at $32.

Read the full analyst report on BLUD

Read the full analyst report on BLUD