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Why Is Luminex (LMNX) Up 12.4% Since Last Earnings Report?

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It has been about a month since the last earnings report for Luminex (LMNX - Free Report) . Shares have added about 12.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Luminex due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Luminex's Q3 Earnings & Revenues Miss, Assay Revenues Down

Luminex reported third-quarter 2018 earnings of 5 cents per share, which missed the Zacks Consensus Estimate by 37.5%. The bottom line plummeted 61.5% on a year-over-year basis.

Revenues in Detail

Revenues came in at $72.4 million, missing the Zacks Consensus Estimate of $74 million. On a year-over-year basis, the top line dropped 2.3%.

Total sample-to-answer molecular product revenues grew 15% from the prior-year quarter to $13.6 million.

Per management, revenues in the quarter were affected by the LabCorp departure.

Luminex’s MDx franchise revenues declined 10% year over year.

Segmental Analysis

System Sales

Revenues at this segment totaled $10 million, up 1.2% from the year-ago quarter.

Consumable Sales

This segment’s revenues totaled $11.6 million, up 9.5% year over year on higher bulk purchases by a large HLA partner.

Royalty Revenues

Royalty revenues summed $12.1 million, up 9.8% on a year-over-year basis.

Assay Revenues

This segment posted revenues worth $33.7 million, down 11% on a year-over-year basis.

Service Revenues

Revenues in the segment grossed $3 million, up 4.2% from the year-ago quarter.

Other

Other revenues came in at $1.9 million, up 8.2% from a year ago.

Business Details

Per management, Luminex secured 81 sample-to-answer molecular systems under contract. Active sample-to-answer customers were about 560 at the end of the third quarter.

Sample-to-answer utilization per VERIGENE customer grew 7% to $104,000 and the same for ARIES rose 28% to $55,000 from the year-ago quarter level.

The company also shipped 284 multiplexing analyzers, comprising MAGPIX systems, LX systems and FLEXMAP 3D systems.

Last month, Luminex entered a definitive agreement with EMD Millipore Corporation to acquire the latter’s flow cytometry portfolio for $75 million.

Margins

Gross profit in the reported quarter was $44.3 million, down 3.4% year over year. Gross margin was 61.1%, down 70 basis points (bps).

Operating expenses totaled $40.5 million, reflecting an increase of 3.1% on a year-over-year basis.

Adjusted operating income amounted to $5.9 million, down 31.2% from the previous-year number.

As a percentage of revenues, operating margin was 8.2%, down 340 bps on a year-over-year basis.

Research and development expenses grossed $12 million, up 12.4% year over year.

Selling, general and administrative expenses in the third quarter were $26.3 million, down a slight 0.4% year over year.

Guidance

Luminex anticipates fourth-quarter 2018 revenues within $77-$79 million.

For 2018, the company expects revenues within $310-$316 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 17.39% due to these changes.

VGM Scores

Currently, Luminex has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Luminex has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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