Big deals carry big risks, and Hologic (HOLX)
does not have a great record with big deals. Couple that with a
difficult hospital spending environment and I can understand why Hologic
shares trade at a discount to fair value. That said, investors who want
to buy into women's health and diagnostics could certainly do worse
than to consider this name.
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Hologic Seems A Little Underrated
Showing posts with label Gen-Probe. Show all posts
Showing posts with label Gen-Probe. Show all posts
Tuesday, July 31, 2012
Friday, July 20, 2012
Seeking Alpha: Another Disappointing Quarter Still Doesn't Make Cepheid Cheap
So far, this has been a tough quarter for some of the growth darlings of
the medical technology sector. It's still somewhat early in the
reporting cycle, but Intuitive Surgical (ISRG) and MAKO Surgical (MAKO) have both disappointed, and Cepheid (CPHD)
joins that unfortunate list for the second time in as many quarters.
While the sort of operational disturbances that Cepheid is seeing are
not at all uncommon with small, young companies, the cripplingly high
expectations built into the stock give it little room to breathe.
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Another Disappointing Quarter Still Doesn't Make Cepheid Cheap
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Another Disappointing Quarter Still Doesn't Make Cepheid Cheap
Tuesday, May 1, 2012
Seeking Alpha:Hologic Must Make The Third Time A Charm
Big deals understandably make investors nervous, but when the buyer in
question already has a record and reputation for overpaying in deals and
failing to reap all of the promised benefits, it's so much the worse.
That's the burden on Hologic (HOLX) now that it has announced a very large, and almost certainly transformative, acquisition of diagnostics company Gen-Probe (GPRO).
But as Hologic's own second quarter earnings suggest, the company
needed another avenue of growth and Gen-Probe just may fit the bill.
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Hologic Must Make The Third Time A Charm
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Hologic Must Make The Third Time A Charm
Friday, April 20, 2012
Seeking Alpha: Cepheid Punished For Unwelcome Variability
Growth investors have an unspoken pact with companies - they'll ignore valuations and keep pushing stocks higher so long as there are no interruptions in the growth trajectory. Unfortunately, Cepheid (CPHD) is not only a growth stock favorite but a fairly small company as well, and variability and occasional stumbles is just part of the learning curve. While the earnings-related sell-off won't bring these shares anywhere near cheap, business continues to develop along very encouraging lines.
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Cepheid Punished For Unwelcome Variability
Continue here for the full article:
Cepheid Punished For Unwelcome Variability
Monday, April 2, 2012
Investopedia: Neogen's Valuation Defies Gravity
While investors are often willing to pay high premiums for above-average growth, many companies see significant underperformance in their stock when they transition to a slower growth profile. That has not yet happened at Neogen (Nasdaq:NEOG). While it may indeed be premature to say that this food safety and animal health company is past its days of double-digit organic growth, the expectations that the Street has baked into this valuation seems difficult to justify.
A Sluggish Quarter, as Expected
To its credit, management didn't serve up any particular negative surprises this quarter. Revenue growth was sluggish at 6.3%, but broadly in line with expectations. Although there were some solid individual performances this quarter (veterinary products up about 30% and animal care up around 40%), it looked more as though the company saw a lot of individual items compress the growth - from de-stocking in Europe to tougher comps from vomitoxin sales last year and so on.
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A Sluggish Quarter, as Expected
To its credit, management didn't serve up any particular negative surprises this quarter. Revenue growth was sluggish at 6.3%, but broadly in line with expectations. Although there were some solid individual performances this quarter (veterinary products up about 30% and animal care up around 40%), it looked more as though the company saw a lot of individual items compress the growth - from de-stocking in Europe to tougher comps from vomitoxin sales last year and so on.
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Tuesday, February 14, 2012
Seeking Alpha: Gen-Probe Looking To New Launches To Drive Momentum
Even for somebody like me who spent the better part of a decade as a sell-side med-tech analyst, the diagnostics industry is often a muddle. While large established players like Abbott Labs (ABT), Danaher (DHR), and Roche (RHHBY.PK) look to change with the times and hang on to lucrative market share, up-and-comers like
Cepheid (CPHD) and Gen-Probe (GPRO) look to shake up the market and drive significant growth through major advances in testing technology.
With a new testing platform on the way and an expanding menu of tests, Gen-Probe may be looking at capturing some real share over the next couple of years. At the same time, valuation leaves little room for mistakes.
Closing Out The Year With A Shrug
Gen-Probe's fiscal fourth quarter earnings were pretty much mediocre. Revenue growth of about 16% was a bit light, with generally better-than-expected performance in blood screening (up almost 31%) offsetting the clinical diagnostics business (up 13%).
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Gen-Probe Looking To New Launches To Drive Momentum
Cepheid (CPHD) and Gen-Probe (GPRO) look to shake up the market and drive significant growth through major advances in testing technology.
With a new testing platform on the way and an expanding menu of tests, Gen-Probe may be looking at capturing some real share over the next couple of years. At the same time, valuation leaves little room for mistakes.
Closing Out The Year With A Shrug
Gen-Probe's fiscal fourth quarter earnings were pretty much mediocre. Revenue growth of about 16% was a bit light, with generally better-than-expected performance in blood screening (up almost 31%) offsetting the clinical diagnostics business (up 13%).
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Gen-Probe Looking To New Launches To Drive Momentum
Wednesday, February 8, 2012
Seeking Alpha: Luminex Has A Lot To Live Up To
I'm a sucker for a good gadget, but investors considering putting their money into Luminex (LMNX) may want to take a closer look at the business model and the current expectations. While Luminex does indeed have an interesting story to tell and growth potential in molecular diagnostics, valuation leaves little room for error.
A Quarter That Came In As Expected
For better or worse, there weren't a lot of surprises in Luminex's final quarter of the year. Overall revenue growth was as expected at 16%, though there was a little less in the consumables (down 16%) and royalties (up 17%) than investors may have wished. Although the company made up for that with strong assay sales (up 28% organically) and stable system revenue (up 1%), these are generally lower-margin businesses for the company.
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Luminex Has A Lot To Live Up To
A Quarter That Came In As Expected
For better or worse, there weren't a lot of surprises in Luminex's final quarter of the year. Overall revenue growth was as expected at 16%, though there was a little less in the consumables (down 16%) and royalties (up 17%) than investors may have wished. Although the company made up for that with strong assay sales (up 28% organically) and stable system revenue (up 1%), these are generally lower-margin businesses for the company.
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Luminex Has A Lot To Live Up To
Tuesday, February 7, 2012
Seeking Alpha: Becton Dickinson Too Beloved For Now
In a market that has offered up plenty of values in med-tech, investors may do well to draw lines between quality and value. There is no question that Becton Dickinson (BDX) is a very good (and very stable) company with substantial market share in a host of profitable sectors. The problem, though, is that there is no shortage of love for this name and no pressing need to buy the stock at current prices.
First Quarter Results Point To One Big Challenge
Perhaps the biggest issue for BD today is producing the sort of growth that it takes to get institutional investors excited and eager to push up the valuation. Reported growth in the fiscal first quarter was just 2.5%, which was at the high end of expectations, but not all that scintillating.
Growth was relatively well-balanced. The smallest division, Biosciences, was also the weakest, as growth was just about 1%. Medical and Diagnostics were relatively stronger, both growing about 3%. Encouragingly, two of the company's strongest business from a platform standpoint, diabetes and diagnostics, were also the strongest from a top-line perspective (growing 6% and 5%, respectively). At the same time, the 2% Med Surg growth was not so bad relative to low procedure counts and the numbers reported from the comparable units at Covidien (COV) and CareFusion (CFN).
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Becton Dickinson Too Beloved For Now
First Quarter Results Point To One Big Challenge
Perhaps the biggest issue for BD today is producing the sort of growth that it takes to get institutional investors excited and eager to push up the valuation. Reported growth in the fiscal first quarter was just 2.5%, which was at the high end of expectations, but not all that scintillating.
Growth was relatively well-balanced. The smallest division, Biosciences, was also the weakest, as growth was just about 1%. Medical and Diagnostics were relatively stronger, both growing about 3%. Encouragingly, two of the company's strongest business from a platform standpoint, diabetes and diagnostics, were also the strongest from a top-line perspective (growing 6% and 5%, respectively). At the same time, the 2% Med Surg growth was not so bad relative to low procedure counts and the numbers reported from the comparable units at Covidien (COV) and CareFusion (CFN).
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Becton Dickinson Too Beloved For Now
Tuesday, January 31, 2012
Seeking Alpha: Skepticism Still Working For Hologic Investors
Investors should always be a little leery of seeing too much love and praise for their holdings; having a few skeptics left to convince leaves some upside. Although Hologic (HOLX) shares have come up nicely in the past quarter, there is still a lot of growth potential in the earnings and in the stock.
Beat, Raise, Rinse, Repeat
Hologic has established a decent track record of slightly outperforming expectations and this fiscal first quarter continued that trend. Revenue rose a little more than 9% this quarter, slightly topping the average guess, as the company logged 10% or better sales growth in its breast health, diagnostics, and skeletal businesses. GYN Surgical was the laggard, with less than 4% growth over last year.
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Skepticism Still Working For Hologic Investors
Beat, Raise, Rinse, Repeat
Hologic has established a decent track record of slightly outperforming expectations and this fiscal first quarter continued that trend. Revenue rose a little more than 9% this quarter, slightly topping the average guess, as the company logged 10% or better sales growth in its breast health, diagnostics, and skeletal businesses. GYN Surgical was the laggard, with less than 4% growth over last year.
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Skepticism Still Working For Hologic Investors
Wednesday, November 30, 2011
Investopedia: Will Qiagen's Restructuring Address The Real Problems?
I am a major skeptic when it comes to the benefits of so-called "restructuring." I don't generally believe that companies find prosperity by firing workers and pulling away from marketing or research and development (R&D). Moreover, I think it sends a very poor message on accountability when the same executives who hired those workers (usually as part of a plan to "invest in growth") are later praised (and rewarded with even bigger pay packages) for firing them.
Now Qiagen (Nasdaq:QGEN) is throwing its hat into the restructuring ring. The real question for shareholders, though, is whether this is another meaningless shuffling of the deck chairs, or whether management has a cogent plan to attain what the company really needs.
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Wednesday, November 16, 2011
Investopedia: Meridian Biosciences - Stealth Income Play
Although healthcare has a lot of attributes that would seem to support healthy dividends (protected markets, high margins, excellent cashflow), there's actually only a fairly limited list of quality income names. Once investors have worked past names like Johnson & Johnson (NYSE:JNJ) and Abbott Labs (NYSE:ABT), most investors have to start looking at pharmaceutical names or accept sub-3% yields.
And there's Meridian Biosciences (Nasdaq:VIVO). An established player in easy-to-use and affordable diagnostic tests, Meridian couples pretty decent growth (and growth potential) with a generous dividend payout. Although this stock is not cheap, it may, nevertheless, appeal to those investors looking for a healthy dividend with some growth upside.
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And there's Meridian Biosciences (Nasdaq:VIVO). An established player in easy-to-use and affordable diagnostic tests, Meridian couples pretty decent growth (and growth potential) with a generous dividend payout. Although this stock is not cheap, it may, nevertheless, appeal to those investors looking for a healthy dividend with some growth upside.
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Friday, November 11, 2011
Investopedia: Is Hologic A Coiled Spring?
It's frankly more difficult to find overvalued health care stocks today than undervalued ones, assuming that the market can transition through this dry spell and that procedure volumes pick up with an eventual economic recovery. Given that Hologic (Nasdaq:HOLX) serves markets largely seen as mature, many investors question whether the company can grow fast enough to be worthwhile. Although that is a legitimate concern, investors have become pessimistic to a point where even modest growth could lead to a strong rebound in the stock.
A Respectable End to the Year
Hologic's business is a combination of solid higher-growth businesses and some smaller, more sluggish operations. Overall growth rose 9% this quarter, with breast health and diagnostics up 11 and 12% respectively, while the surgical and skeletal health businesses grew 1 and 2%. Given that this is still a pretty unhealthy market for capital equipment and doctor office visits, these are pretty solid results. (For related reading on heath care, see How To Avoid Medical Debt.)
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A Respectable End to the Year
Hologic's business is a combination of solid higher-growth businesses and some smaller, more sluggish operations. Overall growth rose 9% this quarter, with breast health and diagnostics up 11 and 12% respectively, while the surgical and skeletal health businesses grew 1 and 2%. Given that this is still a pretty unhealthy market for capital equipment and doctor office visits, these are pretty solid results. (For related reading on heath care, see How To Avoid Medical Debt.)
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Friday, November 4, 2011
Investopedia: Becton Dickinson Moves The Bar Lower
There are only so many times you can lament the malaise in the health care sector, but the fact is that it is a macro trend that is impacting almost every large company in the space. Becton Dickinson (NYSE: BDX) is built as a company with solid exposure to patient visit and procedure trends and that is working against the company now, as baseline procedure trends are weak and the company's pipeline is in a lull. While there is value here, investors could be looking at a stagnant stock for a little while.
A Mediocre End to the Year
BD delivered a mixed end to its fiscal year, slightly beating on the top line and missing slightly on the bottom. Reported revenue growth surpassed 9%, but constant-currency growth was a much more modest 4% and U.S. growth was just barely above 1%. What growth there was, was remarkably balanced across the three major units: BD Medical and BD Diagnostics both posted 3.8% constant currency revenue growth, while Bioscience grew 4.7%.
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Monday, August 8, 2011
Investopedia: Hologic Holding Its Place
While a nervous stock market may be looking for safe places to wait out the economic turbulence in the world, health care does not look like that sort of safe haven these days. Hospitals are spending more than they were a year or two ago, but it is not as though purse strings are uniformly loose. Likewise, while most people still have jobs and continue to see their doctors, enough people have lost jobs or insurance coverage to make an impact on the volumes of health care companies that depend on routine visits. Hologic (Nasdaq:HOLX) is all about routine care (with a capital equipment kicker) and while this remains an attractive franchise, momentum is still soft.
Slow Progress in the Third Quarter
Hologic beat the top end of the analyst range for third quarter revenue, but 7% sales growth is still not likely to get investors too excited. GYN Surgery was a growth leader at nearly 11%, but Hologic's largest unit (Breast Health) was up better than 8% as well. Diagnostics and skeletal health were both up in the low single digits.
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Slow Progress in the Third Quarter
Hologic beat the top end of the analyst range for third quarter revenue, but 7% sales growth is still not likely to get investors too excited. GYN Surgery was a growth leader at nearly 11%, but Hologic's largest unit (Breast Health) was up better than 8% as well. Diagnostics and skeletal health were both up in the low single digits.
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Tuesday, August 2, 2011
Investopedia: Cepheid Soaring
Molecular diagnostics company Cepheid (Nasdaq:CPHD) has long been one of my go-to names whenever I need a high-growth name that the Street did not quite fully understand and appreciate. The good news is that the stock has made my advice look good by more than tripling since the start of 2010. The bad news is that the stock has gone so far so fast that the company is simply going to have to become one of the MDx leaders to validate its current valuation.
Another Great Quarter for Both New and Recurring Business
Cepheid did everything it was supposed to do in the second quarter, and a little more besides. Revenue jumped 35% in the quarter as the company saw product revenue growth of 31%. This growth was fueled by an increase in systems revenue of 53% and reagent revenue of 40%, all of which more than offset the 25% decline in non-clinical revenue. Cepheid's international business is also doing well, growing more than twice the rate of the North American business this quarter.
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Another Great Quarter for Both New and Recurring Business
Cepheid did everything it was supposed to do in the second quarter, and a little more besides. Revenue jumped 35% in the quarter as the company saw product revenue growth of 31%. This growth was fueled by an increase in systems revenue of 53% and reagent revenue of 40%, all of which more than offset the 25% decline in non-clinical revenue. Cepheid's international business is also doing well, growing more than twice the rate of the North American business this quarter.
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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.
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Friday, June 10, 2011
Investopedia: Should Investors Worry If Gen-Probe Doesn't Sell Out?
Gen-Probe (Nasdaq:GPRO) shareholders enjoyed a nice pop in late April when this diagnostics company announced that it was considering a sale. Those easy gains proved short-lived, though, as the stock gave up a lot of that jump when rumors started spreading in early June that the sale process had not been going well and there was only one interested party still in the bidding. (To help you determine if a stock is popping or if the entire market is moving, read Gauging The Strength Of A Market Move.)
Missing the quick and low-risk payday of a buyout would certainly be disappointing to some investors, but shareholders should not be too worried about this turn of events. While it would be discouraging to consider the idea that other companies do not see a lot of must-have value in Gen-Probe's business, there are other interpretations available. All in all, it may prove to be the case that life sciences companies look back on this opportunity with regret and shareholders ultimately benefit from the ongoing independence of Gen-Probe.
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Missing the quick and low-risk payday of a buyout would certainly be disappointing to some investors, but shareholders should not be too worried about this turn of events. While it would be discouraging to consider the idea that other companies do not see a lot of must-have value in Gen-Probe's business, there are other interpretations available. All in all, it may prove to be the case that life sciences companies look back on this opportunity with regret and shareholders ultimately benefit from the ongoing independence of Gen-Probe.
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Wednesday, May 4, 2011
Investopedia: Hologic Holding The Line
Hologic (Nasdaq:HOLX) was an interesting undervalued health care play when the company was waiting on approval for its tomosynthesis product (a better type of breast imaging technology). With approval in hand, though, now the concerns move to customer adoption and low patient volumes throughout the testing business. Though still an attractive and high-quality franchise, the company is going to need to deliver more growth to get the Street excited about the name.
A Fiscal Q2 That's Solid, but Not Spectacular
Hologic delivered a modest outperformance for the fiscal second quarter. Revenue rose about 5%, fueled by nearly 9% growth in the breast health business, as the company saw good pricing and some early adoption of the tomosynthesis product. Diagnostics was still weak (down more than 1%), though, as patient visit volume has not rebounded yet. Gyn/surgical and skeletal were both up above the company average, but these are smaller units.
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A Fiscal Q2 That's Solid, but Not Spectacular
Hologic delivered a modest outperformance for the fiscal second quarter. Revenue rose about 5%, fueled by nearly 9% growth in the breast health business, as the company saw good pricing and some early adoption of the tomosynthesis product. Diagnostics was still weak (down more than 1%), though, as patient visit volume has not rebounded yet. Gyn/surgical and skeletal were both up above the company average, but these are smaller units.
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Thursday, April 28, 2011
Investopedia: What Becton Dickinson Lacks In Flash, It Makes Up For In Quailty
There is a relatively small list of companies like Becton Dickinson (NYSE:BDX) - companies that will leave investors fuming when they miss the relatively few opportunities they give investors to buy on the cheap. Becton Dickinson is not going to impress anybody with stunning growth, but the quality is there and this global medical technology player is a great cornerstone holding for investors that prefer the long-term buy-and-hold approach.
An Okay Fiscal Q2
BDX's quality notwithstanding, the fiscal second quarter was okay. Revenue rose almost 5% on a constant currency basis, with diagnostics (up 6.5%) and medical (4.9%) providing the growth and biosciences (up 0.4%) struggling to hold its own. The company appeared to do well with its diabetes and pharmaceutical systems businesses, and strong sales of diagnostic systems are an encouraging sign (they will require future consumables to operate). Even the biosciences performance wasn't so bad once the headwinds from Japan and tough comps created by the year-ago flu outbreak and stimulus spending are considered. (For more, see A Checklist For Successful Medical Technology Investment.)
Profitability performance was likewise decent. Gross margin was slightly disappointing, as it improved just 10 basis points from last year. Adjusted operating income grew about 6%, and the margin shrunk very slightly, largely as the company upped its R&D spending. All in all, while the company reported an 8-cent beat relative to the average analyst estimate, 5 cents of that seems to have come from taxes and sharecount reduction, so it was more or less an in-line quarter.
Business Should Be Looking Up
Healthcare has been in the doldrums for some time now as job losses, co-payments and general anxieties have kept people away from the doctor's office. Investors can see the impact across the sector - whether it's Hologic (Nasdaq:HOLX), Johnson & Johnson (NYSE:JNJ), Abbott (NYSE:ABT) or any other patient-facing company, procedure volumes are down.
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An Okay Fiscal Q2
BDX's quality notwithstanding, the fiscal second quarter was okay. Revenue rose almost 5% on a constant currency basis, with diagnostics (up 6.5%) and medical (4.9%) providing the growth and biosciences (up 0.4%) struggling to hold its own. The company appeared to do well with its diabetes and pharmaceutical systems businesses, and strong sales of diagnostic systems are an encouraging sign (they will require future consumables to operate). Even the biosciences performance wasn't so bad once the headwinds from Japan and tough comps created by the year-ago flu outbreak and stimulus spending are considered. (For more, see A Checklist For Successful Medical Technology Investment.)
Profitability performance was likewise decent. Gross margin was slightly disappointing, as it improved just 10 basis points from last year. Adjusted operating income grew about 6%, and the margin shrunk very slightly, largely as the company upped its R&D spending. All in all, while the company reported an 8-cent beat relative to the average analyst estimate, 5 cents of that seems to have come from taxes and sharecount reduction, so it was more or less an in-line quarter.
Business Should Be Looking Up
Healthcare has been in the doldrums for some time now as job losses, co-payments and general anxieties have kept people away from the doctor's office. Investors can see the impact across the sector - whether it's Hologic (Nasdaq:HOLX), Johnson & Johnson (NYSE:JNJ), Abbott (NYSE:ABT) or any other patient-facing company, procedure volumes are down.
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Thursday, January 27, 2011
Investopedia: Abbott's Next Act
Abbott (NYSE:ABT) showed its mettle during the Great Recession and was one of the relatively few larger healthcare companies to post solid ongoing results. Unfortunately, Wall Street gives little time for basking in past successes before turning to the question of how high levels of performance can be continued or exceeded. On that score, Abbott would seem to have some work to do.
The full article can be found here:
http://stocks.investopedia.
A Solid End to the Year
Abbott's fourth-quarter results came in basically as expected. Revenue rose more than 13%, as pharmaceutical sales jumped almost 23% and vascular sales rose nearly 14%. Diagnostics was less impressive yet still positive (up 4%), while nutrition was flat. Looking at three key businesses, Humira sales were up 13% (to nearly $1.9 billion), Tricor/Trilipix sales were up more than 19% (to almost $500 million) and stent sales were up almost 20% to over $500 million. (For more, see 6 Important Earnings Announcements.)
Abbott's profitability was a bit more mixed, particularly given the need for some adjustments to the numbers. Gross margin did jump more than two full points from last year, but operating margin shrank a bit as the company ramped up its R&D spending.
Looking for the New "New Thing"
Although Abbott is often praised as a top-notch healthcare enterprise, the reality is that the company depends upon Humira for a large chunk of its profits. That's a problem, as Pfizer (NYSE:PFE) and Rigel (Nasdaq:RIGL)/AstraZeneca (NYSE:AZN) have promising alternatives in the clinic that have seemed to produce solid efficacy with a more convenient oral administration. While the current FDA aversion to the new may shield Humira to some extent, eventually competition (or generics) will hit the market and erode this profit center.
The full article can be found here:
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