Following a strong revenue performance in the second quarter, Luminex Corporation (LMNX - Free Report) announced plans to collaborate with Sutter Health to bolster its molecular diagnostic testing portfolio. The collaboration is expected to enhance the company’s patient care techniques, especially in cases of Cystic Fibrosis, gastrointestinal illness and respiratory tract infections.
Meanwhile, shares of Luminex have inched 0.3% up following the news release. However, over the last month, the stock has lost almost 7.6%, much wider than the broader industry’s decline of only 0.1 %.
Per the terms of the deal, Sutter Health will be leveraging on Luminex molecular diagnostic systems, which include xTAG Cystic Fibrosis, ARIES HSV and VERIGENE Respiratory Pathogens Flex panels. These panels reduce the diagnosis time for patients and help eliminate the unnecessary procedures.
Molecular Testing Portfolio Gets a Boost
The latest development is a significant addition to Luminex’s molecular testing and diagnostic portfolio. The company has a broad product portfolio that comprises its advanced ARIES Systems, VERIGENE, xMAP, xTAG and MultiCode technology and more.
Molecular Diagnostics Group revenues jumped 45% to $10.7 million on a year-over-year basis in the second quarter. The solid performance was driven by growth in automated solutions, VERIGENE and ARIES platforms. Furthermore, the segment got 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.
The company also has a large installed instrument base of the Luminex 100 (LX100), Luminex 200 (LX200), FlexMap 3D systems and the MAGPIX technology. The company has accelerated market acceptance of its xMAP technology through development, marketing and distribution partnerships with leading companies in the life sciences markets.
Favorable Global Trends
Reports suggest that the U.S. molecular diagnostics market is expected to witness stellar growth over the long haul. Per Frost & Sullivan, the niche space is currently seeing a CAGR (compound annual growth rate) of 12.5% and is estimated to reach a worth of $6.5 billion by 2021. We believe collaborative agreements like these will expand Luminex’s customer base and bolster its foothold in the niche space.
Meanwhile, Thermo Fisher Scientific Inc. (TMO - Free Report) is a leading player in the molecular diagnostics space. In an initiative to strengthen the company’s laboratory products and services revenue segment, Thermo Fisher recently acquired Patheon N.V. , a leading contract development and manufacturing organization.
Favorable Estimate Revision Trend
The company’s recent earnings estimates have been robust. The current year has seen five estimates go higher in the past thirty days, while next year estimates have seen four up and one down in the same time period.
This has had a significant impact on the consensus estimate as the current year consensus has risen 11.1% in the past month, while next year estimates have increased 2.2%. Owing to the favorable estimate revisions, Luminex sports a Zacks Rank #1 (Strong Buy), signifying probabilities of outperformance in the near term.
Other Collaborative Agreements at a Glance
Apart from the latest deal with Sutter Health, 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.
Another Key Pick
Another top-ranked stock in the broader medical sector is Edwards Lifesciences Corp. (EW - Free Report) . Notably, the company sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Edwards Lifesciences has a long-term expected earnings growth rate of 15.2% and represents an impressive year-to-date return of 21.2%.
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