On Aug 24, we issued an updated research report on Austin, TX-based Luminex Corp (LMNX - Free Report) – a manufacturer and marketer of proprietary biological testing technologies with applications throughout the life sciences and diagnostics industry. The company currently sports a Zacks Rank #1 (Strong Buy).
Luminex’s second quarter saw strong top-line performance, solid cash flow and soaring profits. The company’s Assay business is likely to be its key growth driver over the long term. Luminex reported earnings of 26 cents per share in the second quarter of 2017. Revenues in the quarter increased almost 19.2% year over year.
Although the company reiterated its 2017 annual revenue guidance, it has projected 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. Luminex expects revenues at the segment to be impacted by funding challenges related to a multi-year bulk bead contract from a life science customer.
The company also witnessed favorable tidings at the regulatory front in the second quarter. In this regard, the recent CE-IVD mark for the ARIES Norovirus Assay, the FDA approval of ARIES C. difficile Assay and the reimbursement approval of VERIGENE assay in Japan are noteworthy. Luminex is on the verge of completing its clinical study for Group A Strep and is close to submitting the same for FDA review.
The company has a broad product portfolio that comprises the advanced xMAP, xTAG and MultiCode technology. Moreover, Luminex has collaborative agreements with several companies, which should help expand the use of its products/technology. In this regard, we note that Luminex had earlier announced the signing of a new supply and distribution agreement with Bio-Techne Corp. (TECH), through 2020. Luminex also entered a similar deal with Affymetrix (AFFX). Under the terms of the agreement, eBioscience, a business division of Affymetrix, will commercialize MAGPIX, Luminex 200 and FLEXMAP 3D multiplexed assay platforms in select countries of the Americas, Asia and Europe.
On the flipside, reimbursement landscape and cutthroat competition continue to be major challenges. Also, the share price movement of Luminex has been unfavorable over the last one year. Notably, the stock lost 10.9%, as against the broader industry’s gain of roughly 3.8%. Further, Luminex’s stock looks a little overvalued at the moment. A comparative analysis of the company’s P/E (TTM basis) multiple reflects a relatively gloomy picture that might be a cause of investor concern.
Zacks Rank & Key Picks
Luminex sports a Zacks Rank #1 (Strong Buy). A few other top-ranked medical stocks are IDEXX Laboratories, Inc. (IDXX - Free Report) , Lantheus Holdings, Inc. (LNTH - Free Report) and Edwards Lifesciences Corporation (EW - Free Report) . Edwards Lifesciences sports a Zacks Rank #1, while Lantheus Holdings and IDEXX Laboratories carry a Zacks Rank #2 (Buy). You cansee the complete list of today’s Zacks #1 Rank stocks here.
Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. The stock has rallied roughly 19.1% over the last six months.
Lantheus Holdings has a long-term expected earnings growth rate of 12.5%. The stock has gained 34.9% over the last six months.
IDEXX Laboratories has a long-term expected earnings growth rate of 19.8%. The stock has gained around 6.2% over the last six months.
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