We reaffirm our Neutral recommendation on Luminex Corporation ( LMNX - Analyst Report ) following its fourth-quarter 2011 results. Earnings of 11 cents a share for the quarter outperformed the Zacks Consensus Estimate of 7 cents. Profit (up roughly 8% year over year) was driven by double-digit growth in sales.

Top-line growth (up 16%) in the quarter was led by strong assay sales, supported by the contributions of EraGen acquisition. Assay sales zoomed 77%, paced by the cystic fibrosis and respiratory viral panel businesses.

On a somber note, revenues from consumable business tumbled 16% in the quarter. The company issued a healthy sales guidance for fiscal 2012 with revenues expected to increase at a double-digit clip over 2011.

Texas-based Luminex develops and markets proprietary biological testing technologies, which have applications across the life sciences industry. Its proprietary open-architecture xMAP technology enables fast, cost-effective and accurate conduct and analysis of biological tests (bioassays).

Luminex continues to expand its xMAP technology-based installed instrument base. The company shipped 307 multiplexing analyzers in the fourth quarter, resulting in total life-to-date shipments of 8,678 analyzers. Luminex registered solid growth in shipment of its MAGPIX analytical instrument in the quarter.

Luminex possesses an extensive product portfolio and a healthy pipeline of novel assays, which are expected to support growth moving 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).

Moreover, the NeoPlex 4 newborn screening assay represents another major new opportunity (currently awaiting launch in Europe). Successful pipeline development would facilitate further growth.

Luminex also has a strong international presence which is helping it to expand its product portfolio and customer base. The company’s collaborative agreements, including the global sales and distribution pact with Life Technologies ( LIFE - Analyst Report ) , should also help expand the use of its products/technology.

The acquisition of EraGen Biosciences provided Luminex a highly complementary portfolio of molecular diagnostic tests and has enabled it to tap new markets. The acquisition contributed meaningfully to the company’s assay revenues in 2011.

However, Luminex operates in the highly competitive life sciences industry. Moreover, the company is challenged by sluggish growth in its core markets, faces regulatory uncertainties, and depends heavily on partners to market its instruments and assays, a strategy that has its risks. Our recommendation on the stock is backed by a short-term Zacks #3 Rank (Hold).