GenMark Parlays Pandemic-Driven Momentum Into A Good Buyout Price

Having followed GenMark Diagnostics (GNMK) through a lot of ups and downs over the years and having usually had a pretty bullish view of the technology, I can’t say that I’m sad to see a happy ending to the story. Roche's (OTCQX:RHHBY) offer for GenMark looks to me like a “win-win”, giving Roche some strong technology and operational leverage upside, while also giving GenMark shareholders a fair return on the assets.

A proxy statement is not available yet as of this writing, so I do not know if there is a meaningful break-up fee, nor whether GenMark fielded inquiries from other buyers. I would not completely dismiss the possibility of a competing bid, but given the premium Roche is paying, it looks to me as though the bidding process was already quite competitive.

Read the full article at Seeking Alpha: 

GenMark Parlays Pandemic-Driven Momentum Into A Good Buyout Price

Better Guidance Fails To Boost GenMark, As The COVID-19 Story No Longer Surprises

One of the warning signs for me with stocks is when good news fails to move the shares. GenMark Diagnostics (GNMK) guided to a third-quarter revenue number that was 10% higher than expected, and the shares have done basically nothing on an otherwise good day for the stock market. While gross margin commentary was perhaps a bit soft, the growth in revenue and placements should have otherwise been good news.

At this point, I believe the COVID-19 opportunity is well-understood, and there are still substantial questions as to whether or not the systems installed to meet the surge in COVID-19 testing will remain in regular use once the pandemic fades. That issue may be tested sooner than some expect, as antigen-based testing is likely to grow considerably from here and become the dominant testing approach for COVID-19.

If the market is truly transitioning to a "post-COVID-19" view on GenMark, a forward revenue multiple of around 5x to 6x on 10% to 15% three-year revenue growth seems reasonable. That still leaves upside for GenMark, and this could be a worse-than-average flu season, but I believe upside is now increasingly reliant on the company's ability to show follow-through adoption of the blood culture panels to maintain high levels of utilization and test consumption.

 

Follow this link to the full article: 

Better Guidance Fails To Boost GenMark, As The COVID-19 Story No Longer Surprises

COVID-19 Bringing Positive Attention To GenMark Diagnostics... For Now

Quite a lot has changed since my last update on GenMark (GNMK) back in January. COVID-19 has swept around the globe, leading to huge disruptions in people’s lives as governments try to cope with and limit the spread of the disease. It has also left the medical community scrambling for options, including testing options as the U.S. was unprepared (or at least under-prepared) for the outbreak here.

I had thought that COVID-19 could provide a boost to GenMark, and the company has actually seen a bigger lift than I expected. A key unknown now, though, is whether SARS-CoV-2/COVID-19 quickly fades into part of our baseline annual experience (particularly if there’s a vaccine) or whether it remains a significant driver for longer. While GenMark shares could still have some upside from here, particularly if COVID-19 proves to be a more persistent issue, I’d be careful about assuming that this is a “this changes everything” moment.

Read more here:
COVID-19 Bringing Positive Attention To GenMark Diagnostics... For Now

GenMark's Share Price Isn't Reflecting The Improvements In The Business

GenMark (GNMK) is a relatively late entrant into a very competitive market, but the company’s ePlex multiplex molecular diagnostics system nevertheless addresses real issues for hospitals and small reference labs, and the overall market is still under-penetrated when it comes to multiplex systems. Management needs to make sure that the company continues to roll out new panels and expand the available test menu at a good pace, but the share price doesn’t seem to give much credit for the improvements in the business relative to a year ago.

Between cash flow and forward revenue, I believe GenMark shares should trade closer to $9 - $10 than $6. An ATM facility should get the company through to positive free cash flow, but it does remain to be seen how system placements will develop over the next 6 to 12 months. Although GenMark remains a riskier than average call, I believe the share price doesn’t reflect the full value of the business.

Continue here:
GenMark's Share Price Isn't Reflecting The Improvements In The Business

Better Execution Leading To Better Valuation For GenMark

I thought GenMark Diagnostics (GNMK) was a high-risk/high-reward opportunity in mid-December, amidst a sharp downturn in the market overall and small-cap med-tech especially, and the shares have rebounded strongly (up almost 50%) since then. While a general sector and market recovery certainly helps, I think GenMark is also helping itself with more consistent management execution and a more credible path to key revenue breakpoints like $100 million, $200 million, and $400 million.

GenMark shares still look undervalued, but this is a competitive space and the company is somewhat late to the game. Although I think the qualities of the ePlex system will help GenMark win slots and drive usage, and I believe the shares are still undervalued below $8, this is still a stock with above-average risks.

Continue here:
Better Execution Leading To Better Valuation For GenMark

GenMark Facing New Challenges Going Into 2019

I can understand if long-term GenMark (GNMK) shareholders feel a little cursed. Although there have been plenty of self-inflicted issues that have dented management credibility and pushed back development and revenue timelines, even when management execution has been good, new challenges have emerged to threaten the company’s longer-term revenue ramp. To that end, adverse coverage decisions, prospects for a more mild flu season, and threats of/from new competitive entrants have cut these shares almost in half from their late summer peak.

GenMark shares do seem undervalued, and I believe the company’s core ePlex platform does address real and legitimate needs in the hospital testing space. I also believe, though, that competitive and reimbursement pressures are unlikely to abate and the company is likely to face some hard choices with respect to funding/liquidity before achieving cash flow breakeven. Accordingly, I have to consider this a pretty high-risk opportunity.

Click here for more:
GenMark Facing New Challenges Going Into 2019

Closer To "Go Time", GenMark Diagnostics's Ability To Execute Is Still A Key Question

Hard as it can be to develop a new diagnostic system and get it though the FDA approval process, that's only part of the battle in achieving success in the diagnostics market. GenMark (NASDAQ:GNMK) has weathered some ups, downs, and delays on its path to market for its new ePlex system, but the company should receive FDA 510(k) approval for the system within weeks and begin launching a system that could deliver over (and perhaps well over) $1 billion in revenue to this small-cap med-tech company.

Of course, it's never quite that simple. GenMark has had its issues reaching the milestones laid out by management on time, and that still remains the case. With U.S. approval looming, significant questions remain regarding management's ability to execute on manufacturing and sales, to say nothing of how the ePlex will fare in the real world against competing systems from bioMerieux (OTC:BMXXY), Luminex (NASDAQ:LMNX), Danaher's (NYSE:DHR) Cepheid, and other existing or would-be players in the market.

I'd still describe myself as cautiously bullish on GenMark, as I believe ePlex is a good platform that answers many of the challenges and needs of hospital and lab customers. The shares have continued to head higher since my last update (though it has been a bumpy ride), though, and the risk/reward isn't quite as favorable as it has been.

Read more here:
Closer To "Go Time", GenMark Diagnostics's Ability To Execute Is Still A Key Question

Investopedia: Becton Dickinson Already Priced For Excellence

It's pretty rare to see an “Underperform” rating on a med-tech stock these days, but Becton Dickinson (NYSE:BDX) carries more than Johnson & Johnson (NYSE:JNJ), Abbott (NYSE:ABT), and Cepheid (Nasdaq:CPHD) combined. I won't pretend to have read all the research reports out there, but it seems that most of those analysts who are cautious/negative on BD are so because of the stock's very robust valuation and concerns about both near-term and long-term growth in the diagnostics business. I too see these shares as overpriced relative to the likely growth trajectory, and wouldn't be a buyer at these levels.

Click this link for the full piece:
http://www.investopedia.com/stock-analysis/080113/becton-dickinson-already-priced-excellence-bdx-abt-rhhby-cphd-holx.aspx