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Luminex (LMNX) Down 2.7% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Luminex (LMNX - Free Report) . Shares have lost about 2.7% in that time frame, underperforming the S&P 500.

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

Luminex Q4 Earnings Miss, Assay Revenues Down Y/Y

Luminex reported fourth-quarter 2018 earnings of 4 cents per share (EPS), which missed the Zacks Consensus Estimate by 66.7%. The bottom line also fell from the year-ago quarter’s 20 cents.

Notably, post the announcement, shares of the company plunged. Notably, 2019 revenues are estimated in the band of $337-$343 million. The midpoint of the latest guidance of $340 million is marginally below the Zacks Consensus Estimate of $340.8 million.

Revenues in Detail

Revenues came in at $81.1 million, surpassing the Zacks Consensus Estimate by 2.6%. On a year-over-year basis, the top line climbed 3.8%.

Total sample-to-answer franchise revenues grew 41% from the prior-year quarter. On a full-year basis, revenues grew 34%.

Molecular diagnostic revenues were $39 million, down 11% year over year and up 1% from 2017.

Segmental Analysis

System Sales

Revenues at this segment totaled $10.2 million, down 1.3% from the year-ago quarter.

Consumable Sales

This segment accounted for $15.7 million of revenues, up 56.7% year over year. Per management, the upside was driven by higher bulk purchases by some of Luminex’s partners.

Royalty Revenues

Royalty revenues summed $13.5 million, up 19.2% on a year-over-year basis.

Assay Revenues

This segment posted revenues worth $37 million, down 11.7% on a year-over-year basis.

Service Revenues

Revenues in the segment grossed $3.2 million, up 12.1% from the year-ago quarter.

Other

Other revenues came in at $1.6 million, down 14% from a year ago.

Business Details

Per management, this Texas-based company placed 60 sample-to-answer molecular systems under contract during the fourth quarter. Active sample-to-answer customers are nearing 600.

Sample-to-answer utilization per VERIGENE customer grew 10% to $109,000, while the same for ARIES rose 14% to $53,000 from the year-ago quarter level.

The company also shipped 268 multiplexing analyzers, comprising MAGPIX systems, LX systems and FLEXMAP 3D systems.

Margins

Gross profit in the reported quarter was $48.3 million, down 4% year over year. Gross margin was 59.6%, which contracted 480 basis points (bps).

Research and development expenses grossed $13.2 million, up 27% year over year. Selling, general and administrative expenses in the fourth quarter were $32 million, up 11.6% year over year. Operating expenses totaled $47.4 million, up 14.8% from the previous year number.

As a percentage of revenues, adjusted operating margin was 3.9%, down significantly from the year-ago margin of 14.4%.

Guidance

For the first quarter of 2019, the company expects revenues between $82 million and $84 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -44% due to these changes.

VGM Scores

At this time, Luminex has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Luminex has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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