We have upgraded our long-term recommendation for genetic products maker Affymetrix Inc ( AFFX - Analyst Report ) from Underperform to Neutral.

Recently, in June, Affymetrix completed its previously announced acquisition of eBioscience Holding Company, Inc. for $315 million in cash.The acquisition should significantly boost Affymetrix’s foothold in the fast-growing immunology, oncology and translational medicine markets, representing an annual opportunity nearing $2.5 billion. It will diversify the company’s revenue base, expand its product range (to include a vast array of reagents) and reinforce its growing molecular diagnostics business.

Moreover, in the month of May, the company entered into a global distribution agreement with ScreenCell, a medical devices company, which specializes in isolating rare circulatory cells. This latest addition to the expression business will revolutionize cancer treatment in a big way as it will enable quick and cost-effective translational research.

Affymetrix is expanding its customer base through new product launches. In the most recent quarter, the company launched and shipped the most sophisticated functional variants in protein coding regions of the human genome, the Axiom Exome Genotyping Array, in the market.

However, Affymetrix’s product revenue especially consumable sales have been declining for quite some time now. The company’s core business, the expression unit (which constitutes about 50% of total revenue) has not been performing up to the mark. Despite European and Asian expression units reporting positive results, American array sales are still sluggish and so are in vitro transcription (“IVT”) sales.

The company also needs to successfully integrate its acquisitions so that they do not turn out to be a waste of resources. Affymetrix is operating in an intensely competitive industry and faces risks associated with lower research and development (R&D) spending by its customers due to a soft economy and government actions including budget cuts.

Affymetrix is a leading provider of microarray-based products and services to the global research community. Along with Illumina Inc. ( ILMN - Snapshot Report ) , it is one of the two major providers of microarray technologies, primarily used in the field of genetic research.

The stock currently retains a Zacks #2 Rank, which translates into a short-term Buy recommendation.