Within the life sciences and clinical diagnostics worlds, Bio-Rad (BIO) is an odd duck. More like Techne (TECH) than Illumina (ILMN), Cepheid (CPHD), or even Thermo Fisher (TMO),
Bio-Rad isn't looking to redefine its markets or change the game.
Instead, this is a company that lets others be the first-movers and
focuses on leveraging its large global distribution system and driving
consistent, dependable financial results.
That's all well and good
when the stock is priced that way. Unfortunately, Bio-Rad is often
picked as an undervalued "hidden gem" in the life sciences/diagnostics
space on the basis of its EV/EBITDA or EV/rev ratio, but without the
acknowledgment of the differences in the models. None of this is to say
that Bio-Rad is a bad company - trailing growth rates of 8% to 16% for
revenue, free cash flow, and book value per share are quite good - but I
do think investors have to be careful about the extent to which they
goose their growth rates when considering the shares' fair value.
Please click the link to read the full article:
Bio-Rad Built For Consistency, Not Short-Term Out-Performance
Showing posts with label Immucor. Show all posts
Showing posts with label Immucor. Show all posts
Wednesday, September 18, 2013
Tuesday, July 5, 2011
Investopedia: Immucor Passes Its Last Test
Perhaps moreso than in any other industry, there are companies in medical technology that just seem destined to eventually get bought out. A leading player in immunohematology, Immucor (Nasdaq:BLUD) was a very good example of this type of company and the Immucor announced on Tuesday morning that it had accepted a bid from private equity group TPG Capital.
The Terms of the Deal
Immucor shareholders are going to get $27 in cash for each of their shares, a 30% premium to the stock price on Friday but still shy of the stock's all-time high in 2007 of $39.96. At this price, Immucor is going out at a reasonable price/sales multiple (a common metric for med-tech deals) and the company does not seem to be leaving much cash on the table with respect to a discounted cash flow model. (Valuing firms in this sector can seem like a black art, but there is a systematic way to pin a price on potential. For more, see Using DCF In Biotech Valuation.)
Not that it will matter much to the selling shareholders, but this deal further extends TPG Capital's involvement in the health care sector. Arguably more known for involvement in deals for companies like Neiman Marcus, Univision and TXU, TPG has investment interests in other significant health care companies like Biomet, Quintiles and Surgical Care Affiliates.
To read the complete article, please click below:
http://stocks.investopedia.
Friday, March 4, 2011
Seeking Alpha: Why I (Finally) Gave Up On Johnson & Johnson
Recently I made a change to my portfolio. After several years of patient ownership, I decided that I had had enough of the foibles and struggles of healthcare giant Johnson & Johnson (JNJ) and that it was time to move on to a new idea. While JNJ still features prominently on many lists of “top healthcare” or “top dividend” stocks, I would suggest that investors might want to think about this a little further. Perhaps there are still valid reasons for owning Johnson & Johnson, but maybe some investors will agree that it is time to give up on the idea that JNJ will live up to our ideas about what it should be.
With that in mind, here are the leading reasons that I quit on Johnson & Johnson:
1. Little Leadership
Quick – name a market in which Johnson & Johnson is really a dynamic force and an industry leader.
That is a big problem; there is relatively little that JNJ still does very well. Although JNJ has shown an ability to buy its way into attractive markets, it seems to lack the foresight and follow-through to really maintain that leadership. JNJ was the early leader in stents, only to lose out to better products and marketing from Guidant (now owned by Boston Scientific (BSX)) and Medtronic (MDT). Drug-coated stents offered an eerie repeat – JNJ was was among the first, but saw that lead crumble due to competition from Boston Scientific, Medtronic, and Abbott (ABT).
Please continue to the full article at Seeking Alpha:
http://seekingalpha.com/article/256373-why-i-finally-gave-up-on-johnson-johnson
With that in mind, here are the leading reasons that I quit on Johnson & Johnson:
1. Little Leadership
Quick – name a market in which Johnson & Johnson is really a dynamic force and an industry leader.
That is a big problem; there is relatively little that JNJ still does very well. Although JNJ has shown an ability to buy its way into attractive markets, it seems to lack the foresight and follow-through to really maintain that leadership. JNJ was the early leader in stents, only to lose out to better products and marketing from Guidant (now owned by Boston Scientific (BSX)) and Medtronic (MDT). Drug-coated stents offered an eerie repeat – JNJ was was among the first, but saw that lead crumble due to competition from Boston Scientific, Medtronic, and Abbott (ABT).
Please continue to the full article at Seeking Alpha:
http://seekingalpha.com/article/256373-why-i-finally-gave-up-on-johnson-johnson
Wednesday, February 9, 2011
Investopedia: Danaher Hopes To Revive Beckman Coulter
Ending weeks of speculation, industrial conglomerate Danaher (NYSE:DHR) announced a bid for Beckman Coulter (NYSE:BEC) on Monday morning. Assuming that the deal goes through, and that is likely given the Beckman board's support, Danaher will join the likes of Abbott (NYSE:ABT), Siemens (NYSE:SI), and Roche (Nasdaq:RHHBY) as the biggest fish in the diagnostics pond. That said, Danaher is paying a rich premium for the chance to apply its operational magic touch to a company that desperately needs help.
The Deal
Beckman has been trading on deal speculation since early December, and it was only last week that a Reuters article speculated on private equity bids in excess of $5 billion for the company. At that time, little mention was made of a strategic buyer for the business, though this author has been maintaining that Danaher would likely be the most credible buyer and that a price of eight times trailing EBITDA would be a fair price.
Lo and behold, Danaher has offered $83.50 in cash for Beckman, a nearly $7 billion deal that values Beckman at a trailing EV/EBITDA of just a bit over eight. That bid also represents a 45% premium to Beckman's pre-rumor price, and a pretty generous price for a true turnaround project. Given the operational improvements that Beckman needs and some of the peculiarities of the business, the last large deal in diagnostics (Siemens' acquisition of Dade Behring for 16 times EBITDA in 2007) is really not an apples-to-apples comparison, so Beckman shareholders should not feel too badly abused in this transaction. (For related reading, Does Beckman Bow To The Inevitable?)
What Danaher is Getting
In Beckman Coulter, Danaher is acquiring a diagnostics business with some major heft in many sizable markets. Beckman is a leader in the clinical chemistry market and has been at the vanguard of the fast-growing lab automation market (where expensive and increasingly hard-to-find technicians are being replaced by machinery). Beckman is relatively less of a factor in the faster-growing immunoassay market, but has a large share in the hematology market and a decent foothold in flow cytometry, where it competes with Becton Dickinson (NYSE: BDX) (among others).
Please read the full piece at:
http://stocks.investopedia.
The Deal
Beckman has been trading on deal speculation since early December, and it was only last week that a Reuters article speculated on private equity bids in excess of $5 billion for the company. At that time, little mention was made of a strategic buyer for the business, though this author has been maintaining that Danaher would likely be the most credible buyer and that a price of eight times trailing EBITDA would be a fair price.
Lo and behold, Danaher has offered $83.50 in cash for Beckman, a nearly $7 billion deal that values Beckman at a trailing EV/EBITDA of just a bit over eight. That bid also represents a 45% premium to Beckman's pre-rumor price, and a pretty generous price for a true turnaround project. Given the operational improvements that Beckman needs and some of the peculiarities of the business, the last large deal in diagnostics (Siemens' acquisition of Dade Behring for 16 times EBITDA in 2007) is really not an apples-to-apples comparison, so Beckman shareholders should not feel too badly abused in this transaction. (For related reading, Does Beckman Bow To The Inevitable?)
What Danaher is Getting
In Beckman Coulter, Danaher is acquiring a diagnostics business with some major heft in many sizable markets. Beckman is a leader in the clinical chemistry market and has been at the vanguard of the fast-growing lab automation market (where expensive and increasingly hard-to-find technicians are being replaced by machinery). Beckman is relatively less of a factor in the faster-growing immunoassay market, but has a large share in the hematology market and a decent foothold in flow cytometry, where it competes with Becton Dickinson (NYSE: BDX) (among others).
Please read the full piece at:
http://stocks.investopedia.
Monday, November 8, 2010
Some Welcome News For Immucor
Immucor (Nasdaq: BLUD) got some much-needed good news today, announcing that the Department of Justice informed the company that the anti-trust investigation was closed.
This issue popped up about 18 months ago, just after I initiated on the company when I was an analyst. I always thought the investigation was ridiculous, and the idea that Immucor and Johnson & Johnson (NYSE: JNJ) were cooperating on pricing was nonsense. Nevertheless, it was part of a burst of antitrust investigations that seemed to coincide with the new administration in Washington, and there was certainly some down-side risk if the DoJ had decided to pursue actual charges. What's more, it held the potential of being a big cost sink for the company.
I think most people had calmed down on the risks of this issue over the past year or so, so I don't expect a big move in the stock from here. That said, it does remove a large open-ended risk and it one less thing to worry about.
Disclosure - I own shares of JNJ.
This issue popped up about 18 months ago, just after I initiated on the company when I was an analyst. I always thought the investigation was ridiculous, and the idea that Immucor and Johnson & Johnson (NYSE: JNJ) were cooperating on pricing was nonsense. Nevertheless, it was part of a burst of antitrust investigations that seemed to coincide with the new administration in Washington, and there was certainly some down-side risk if the DoJ had decided to pursue actual charges. What's more, it held the potential of being a big cost sink for the company.
I think most people had calmed down on the risks of this issue over the past year or so, so I don't expect a big move in the stock from here. That said, it does remove a large open-ended risk and it one less thing to worry about.
Disclosure - I own shares of JNJ.
Thursday, October 7, 2010
Immucor Investors Out For Blood
It's not uncommon for Wall Street to strike unspoken bargains with certain companies in the healthcare space; If companies provide reliable, by-the-numbers performance, they will receive rich valuation multiples in return. That deal worked well for specialty diagnostics company Immucor (Nasdaq:BLUD) and its shareholders for many years, but has fallen apart since the company was beset by problems starting in 2009. Although the company had been making some progress, this latest quarterly report is likely to send the stock straight back to the penalty box for some time. (For background reading, see The Ups And Downs Of Biotechnology and Investing In The Healthcare Sector.)
The Quarter That Was
Immucor reported that sales rose only 1% for the fiscal first quarter, falling slightly short of the average estimate on the Street. Although the company saw decent growth in instrument sales (up 18%) with the ongoing launch of the Neo, traditional reagent sales fell 9%. That's a problem given that this figure represents almost 60% of total revenue. Capture reagent sales did better, though, with 18% growth. What was more worrisome was the company's shortfall in instruments and the lower guidance for system sales throughout the year. New machine sales fuel future reagent sales, so a reduction in system sales has broad implications for future profits.
For the full article, please click here:
http://stocks.investopedia.com/stock-analysis/2010/Immucor-Investors-Out-For-Blood-BLUD-BIO-GENZ-BSX-ABT-GPRO1007.aspx
I hope these guys get it all sorted out. I followed the stock as an analyst, and there are some very good people working there.
By the way, Johnson & Johnson (JNJ - which I own) is the other half of the U.S. blood typing duopoly. Because I own the stock, I could not mention that in the piece...
The Quarter That Was
Immucor reported that sales rose only 1% for the fiscal first quarter, falling slightly short of the average estimate on the Street. Although the company saw decent growth in instrument sales (up 18%) with the ongoing launch of the Neo, traditional reagent sales fell 9%. That's a problem given that this figure represents almost 60% of total revenue. Capture reagent sales did better, though, with 18% growth. What was more worrisome was the company's shortfall in instruments and the lower guidance for system sales throughout the year. New machine sales fuel future reagent sales, so a reduction in system sales has broad implications for future profits.
For the full article, please click here:
http://stocks.investopedia.com/stock-analysis/2010/Immucor-Investors-Out-For-Blood-BLUD-BIO-GENZ-BSX-ABT-GPRO1007.aspx
I hope these guys get it all sorted out. I followed the stock as an analyst, and there are some very good people working there.
By the way, Johnson & Johnson (JNJ - which I own) is the other half of the U.S. blood typing duopoly. Because I own the stock, I could not mention that in the piece...
Thursday, June 17, 2010
Covidien's Still Hungry
Nobody is going to accuse the management at Covidien (NYSE:COV), a diversified medical technology company, of being slow to make any changes. It was only two weeks ago that the company announced that it was entering the peripheral and neurovascular intervention markets by buying ev3 and largely exiting parts of the respiratory care market with a divestiture.
Now the company is at it again, announcing Wednesday morning that it was acquiring small medical device maker Somanetics (Nasdaq:SMTS) for almost $300 million in cash. That deal represents a 32% premium to the closing price prior to the deal, and a valuation of nearly six times on a trailing price-to-sales basis. Given that growing small-cap medical technology companies generally trade for between four and six times trailing sales and get bought out at between five and eight times, this seems to be a fair deal for both parties. (For more on this topic, check out The Wacky World Of Mergers And Acquisitions.)
You can read the full piece here:
http://stocks.investopedia.
Now the company is at it again, announcing Wednesday morning that it was acquiring small medical device maker Somanetics (Nasdaq:SMTS) for almost $300 million in cash. That deal represents a 32% premium to the closing price prior to the deal, and a valuation of nearly six times on a trailing price-to-sales basis. Given that growing small-cap medical technology companies generally trade for between four and six times trailing sales and get bought out at between five and eight times, this seems to be a fair deal for both parties. (For more on this topic, check out The Wacky World Of Mergers And Acquisitions.)
You can read the full piece here:
http://stocks.investopedia.
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