It has been about a month since the last earnings report for Luminex Corporation . Shares have lost about 2.5% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Recent Earnings
Headquartered in Austin, TX, Luminex Corporation reported earnings of $0.26 per share in the second quarter of 2017, surpassing the Zacks Consensus Estimate by a massive 188.9%.
Revenues in the quarter increased almost 19.2% year over year to $76.5 million, ahead of the Zacks Consensus Estimate of $75 million.
Segment Analysis
System Sales: The segment jumped 10.1% on a year-over-year basis to $9.9 million. Notably, the company shipped 270 multiplexing analyzers in the reported quarter that led to higher system revenues. Here we note that system sales included MAGPIX systems, LX systems, FLEXMAP 3D systems.
Assay Revenues: Assay revenues grew 45.8% year over year, out of which 12% was organic.
Royalty Revenues:Coming to royalty revenues, sales at this segment declined 4.7% on a year-over-year basis to around $10.8 million. Royalty revenues lacked luster in the reported quarter owing to timing of items like royalty minimums and audit payments.
Consumables Sales: Revenues at the segment declined 0.2% to $13.3 million. Per management, consumable revenue expectations will be adversely impacted by funding challenges owing to a multiyear bulk bead contract by a life science customer.
Quarter Highlights
Positive Tidings on the Regulatory Front: Luminex received its fourth and fifth FDA clearances on the Aries assay platform in the second quarter for ARIES Bordetella and ARIES C. Difficile assays. Luminex also gained CE-IVD marking for Norovirus and C. Difficile. In fact, the company is on the verge of completion of its clinical study for Group A Strep, which would be soon given for review to the U.S. FDA.
Lastly, Luminex announced that Japan's Central Social Insurance Medical Council has approved the recommendation by the Japanese Ministry of Health, Labor and Welfare (MHLW) to provide reimbursement for its proprietary VERIGENE assays. The approval was for two VERIGENE assays: the Gram-Positive Blood Culture test and the Gram-Negative Blood Culture test. Notably, Luminex is the only company in Japan with a clear automated sample-to-answer solution for blood culture identification.
Molecular Diagnostic Business Solid: Molecular Diagnostics Group jumped 45% to $10.7 million on a year-over-year basis in the second quarter. Solid performance was fuelled by growth in automated solutions, VERIGENE and ARIES platforms. Furthermore, the segment got an additional momentum from the recently negotiated group purchasing organization agreements that are adding ARIES platform to their existing VERIGENE agreements, or are establishing new agreements.
Margins Details: Gross margin was 65% in the reported quarter, highlighting a contraction of 300 basis points (bps) year over year. The margins deteriorated on a year-over-year basis owing to an anticipated shift in overall product mix and higher inclusion of lower margin automated sample-to-answer solutions.
However, gross margin came in line with the expectations, courtesy of improvement in margin of Verigene and ARIES-related revenues, stringent cost management of the acquired enterprises, incremental system placements and a continuing flow of new assays.
Operating expenses rose 14% on a year-over-year basis, largely due to the incorporation of Nanosphere. R&D expenses (16% of net revenues) for the quarter were up 6% on a year-over-year basis. Meanwhile, SG&A costs were up 16% year over year. Excluding Nanosphere SG&A expenses increased just 3%. As a result, operating margin, as a percentage of revenues was 10% or $7.5 million in the second quarter.
Financial Condition: The company ended the second quarter with approximately $103.7 million in cash and investments, up $17 million from the first quarter.
Guidance
Luminex reiterated its 2017 annual revenue guidance to the band of $300 million to $310 million. This depicts 11% to 14% growth on a year-over-year basis. Luminex expects gross margins for the next few quarters to hover in the mid-60s.
However, the company projects third-quarter 2017 revenues in the range of $73 million and $75 million, down from the previously issued band of $74 million to $76 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend for fresh estimates. There has been one revision higher for the current quarter compared to three lower. In the past month, the consensus estimate has shifted lower by 64.7% due to these changes.
VGM Scores
At this time, Luminex's stock has an average Growth Score of C, though it is lagging a lot on the momentum front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #2 (Buy). We are looking for an above average return from the stock in the next few months.
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Luminex (LMNX) Down 2.5% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Luminex Corporation . Shares have lost about 2.5% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Recent Earnings
Headquartered in Austin, TX, Luminex Corporation reported earnings of $0.26 per share in the second quarter of 2017, surpassing the Zacks Consensus Estimate by a massive 188.9%.
Revenues in the quarter increased almost 19.2% year over year to $76.5 million, ahead of the Zacks Consensus Estimate of $75 million.
Segment Analysis
System Sales: The segment jumped 10.1% on a year-over-year basis to $9.9 million. Notably, the company shipped 270 multiplexing analyzers in the reported quarter that led to higher system revenues. Here we note that system sales included MAGPIX systems, LX systems, FLEXMAP 3D systems.
Assay Revenues: Assay revenues grew 45.8% year over year, out of which 12% was organic.
Royalty Revenues:Coming to royalty revenues, sales at this segment declined 4.7% on a year-over-year basis to around $10.8 million. Royalty revenues lacked luster in the reported quarter owing to timing of items like royalty minimums and audit payments.
Consumables Sales: Revenues at the segment declined 0.2% to $13.3 million. Per management, consumable revenue expectations will be adversely impacted by funding challenges owing to a multiyear bulk bead contract by a life science customer.
Quarter Highlights
Positive Tidings on the Regulatory Front: Luminex received its fourth and fifth FDA clearances on the Aries assay platform in the second quarter for ARIES Bordetella and ARIES C. Difficile assays. Luminex also gained CE-IVD marking for Norovirus and C. Difficile. In fact, the company is on the verge of completion of its clinical study for Group A Strep, which would be soon given for review to the U.S. FDA.
Lastly, Luminex announced that Japan's Central Social Insurance Medical Council has approved the recommendation by the Japanese Ministry of Health, Labor and Welfare (MHLW) to provide reimbursement for its proprietary VERIGENE assays. The approval was for two VERIGENE assays: the Gram-Positive Blood Culture test and the Gram-Negative Blood Culture test. Notably, Luminex is the only company in Japan with a clear automated sample-to-answer solution for blood culture identification.
Molecular Diagnostic Business Solid: Molecular Diagnostics Group jumped 45% to $10.7 million on a year-over-year basis in the second quarter. Solid performance was fuelled by growth in automated solutions, VERIGENE and ARIES platforms. Furthermore, the segment got an additional momentum from the recently negotiated group purchasing organization agreements that are adding ARIES platform to their existing VERIGENE agreements, or are establishing new agreements.
Margins Details: Gross margin was 65% in the reported quarter, highlighting a contraction of 300 basis points (bps) year over year. The margins deteriorated on a year-over-year basis owing to an anticipated shift in overall product mix and higher inclusion of lower margin automated sample-to-answer solutions.
However, gross margin came in line with the expectations, courtesy of improvement in margin of Verigene and ARIES-related revenues, stringent cost management of the acquired enterprises, incremental system placements and a continuing flow of new assays.
Operating expenses rose 14% on a year-over-year basis, largely due to the incorporation of Nanosphere. R&D expenses (16% of net revenues) for the quarter were up 6% on a year-over-year basis. Meanwhile, SG&A costs were up 16% year over year. Excluding Nanosphere SG&A expenses increased just 3%. As a result, operating margin, as a percentage of revenues was 10% or $7.5 million in the second quarter.
Financial Condition: The company ended the second quarter with approximately $103.7 million in cash and investments, up $17 million from the first quarter.
Guidance
Luminex reiterated its 2017 annual revenue guidance to the band of $300 million to $310 million. This depicts 11% to 14% growth on a year-over-year basis. Luminex expects gross margins for the next few quarters to hover in the mid-60s.
However, the company projects third-quarter 2017 revenues in the range of $73 million and $75 million, down from the previously issued band of $74 million to $76 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend for fresh estimates. There has been one revision higher for the current quarter compared to three lower. In the past month, the consensus estimate has shifted lower by 64.7% due to these changes.
Luminex Corporation Price and Consensus
Luminex Corporation Price and Consensus | Luminex Corporation Quote
VGM Scores
At this time, Luminex's stock has an average Growth Score of C, though it is lagging a lot on the momentum front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #2 (Buy). We are looking for an above average return from the stock in the next few months.