Seeking Alpha: Ahead Of Major Launches, GenMark Diagnostics Still Has Some Value

This is shaping up to be a very big year for GenMark Diagnostics (NASDAQ:GNMK) as this molecular diagnostics company looks forward to the launch of its new ePlex multiplex molecular diagnostics system. With over 5,000 potential hospital and lab customers and over $2 billion in addressable annual market revenue, adoption of the ePlex could turn GenMark into a legitimate multi-year growth story.

GenMark Diagnostics has done okay since my last article, rising 26% as the company has come through on instrument placements, consumables pull-through, and (most importantly) the development timeline for its new ePlex system. To put that performance in context, though, investors should note that Cepheid (NASDAQ:CPHD) is up close to 50% over that same time, and Fluidigm (NASDAQ:FLDM) is up more than 70% (while BioMerieux (OTCPK:BMXMF) is up about 16% and Luminex (NASDAQ:LMNX) is down) - so it's not as though molecular diagnostics stocks haven't been doing alright.

Although these shares don't appear all that cheap on a discounted cash flow basis, the Street has shown over and over again that it will pay up for growing med-tech stories - sometimes to the tune of 8x or higher forward revenue multiples. While GenMark has its work cut out to prove that it can grow from roughly $30 million a year in revenue to a number almost seven times that over the next five years, success would support a fair value today in the high teens.

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Ahead Of Major Launches, GenMark Diagnostics Still Has Some Value