Luminex a Nickel Ahead, Lifts View

Luminex Corporation (LMNX - Analyst Report), a developer of biological testing technologies, reported solid second-quarter fiscal 2011 results. Earnings of 11 cents a share easily beat the Zacks Consensus Estimate of 6 cents and transcended the year-ago earnings of 2 cents. Profit skyrocketed more than five-fold year over year to roughly $4.6 million on the back of solid double-digit sales growth.

Revenues propelled 43% year over year to $47.6 million, surpassing the Zacks Consensus Estimate of $41 million. Sales were boosted by solid consumables revenues which catapulted 90% to a record $18.4 million. 

System sales jumped 16% to $9.1 million, supported by healthy shipments of multiplexing analyzers. Luminex shipped 248 analyzers (including 62 MAGPIX systems) in the second quarter, resulting in total life-to-date shipments of 8,145 analyzers, up 13% year over year. Royalty revenues cruised 52% to roughly $7.4 million. Assay sales soared 24% to $9.3 million driven by strong contributions from the cystic fibrosis and respiratory viral panel businesses.

Gross margin inched up to 71% from 69.7% a year-ago. Operating expenses climbed roughly 20% year over year to $25 million with operating margin surging to 18.5% from 6.8% a year ago. Luminex exited the second quarter with cash and cash equivalents of $55.6 million, down 34% year over year, with total long-term debt of $3.6 million (down 6% year over year).

Luminex has raised its revenue forecast for fiscal 2011 to a range of $180 million to $185 million (from $163 to $170 million), factoring in the expected contributions (of $5 million-$7 million) from its recently closed acquisition of privately-held diagnostic testing company EraGen Biosciences. The current Zacks Consensus Estimate is $170 million.

Luminex develops and markets proprietary biological testing technologies, which have applications across the life sciences industry. Its xMAP technology enables fast, cost-effective and accurate conduct and analysis of biological tests. The company remains committed to expanding its xMAP technology-based installed instrument base and continuing to spend on assay development.

Luminex has an extensive product portfolio and a healthy pipeline, which are expected to support growth going ahead. The company, in July 2011, received the U.S. approval for its xTAG Respiratory Viral Panel (“RVP”) Fast assay. It has also received the European CE mark for its xTAG Gastrointestinal Pathogen Panel (“GPP)”.

Luminex completed its acquisition of EraGen Biosciences for $34 million in cash. The acquisition provides the company a highly complementary portfolio of molecular diagnostic tests. Besides, it enables Luminex to tap new markets leveraging EraGen’s innovative technologies. Moreover, the company, in June 2011, forged a global sales and distribution deal with life sciences company Life Technologies Corporation (LIFE - Analyst Report) for its flagship MAGPIX analytical instrument.

However, Luminex operates in the highly competitive life sciences industry . Moreover, the company is challenged by sluggish growth in its core markets. Our Neutral recommendation on the stock is backed by a short-term Zacks #3 Rank (Hold).

Read the full analyst report on LIFE

Read the full analyst report on LMNX