Friday, February 14, 2014

Seeking Alpha: For A Wild Ride, Consider GenMark Diagnostics

I really don't know if the next five years at GenMark Diagnostics (GNMK) are going to be more like Luminex (LMNX) or more like Cepheid (CPHD). If it's the former, the stock will chop around a lot as the company struggles to establish its system as a preferred option in multiplex molecular diagnostics testing. If it's the latter, GenMark will see strong adoption of a fast, accurate, easy-to-use system that becomes a new must-have in hospitals and reference labs.

I like GenMark's technology and I think there is room in the market for a strong automated multiplex MDx system. By no means does that guarantee success, though, and investors are going to have to put up with many years where valuation is based either on long-distant cash flows or very arbitrary multiples to forward revenue. For today, GenMark's value seems sandwiched in between a DCF approach that suggests the shares are overvalued (as it would have for Cepheid and Illumina before, and during, their huge runs) and a discounted EV/revenue approach that suggests the significant revenue growth potential isn't adequately reflected in the shares.

Read more here:
For A Wild Ride, Consider GenMark Diagnostics

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