Affymetrix Inc (AFFX) recently announced preliminary revenue expectation for the fourth quarter of 2014. The company’s estimated revenues of $93 million compare favorably with the Zacks Consensus Estimate of $89 million.
For full-year 2014, Affymetrix expects revenues to increase 9% to $348 million, slightly better than the company’s earlier guidance of $345 million. The estimated year-over-year growth reflects that Affymetrix’s revenue diversification strategy of focusing on high-growth markets is finally paying off.
Affymetrix is a major provider of microarray technologies primarily used in the field of genetic research. However, declining demand for GeneChip Expression monitoring arrays has compelled the company to focus on growing markets of translational medicine, molecular diagnostics and applied markets such as agricultural biotechnology.
The restructuring program that started in 2013 also aims at improving profitability. The company has already completed phase I (2011-2012) and phase II (2013-2014) of the program. In these phases, Affymetrix realigned its product portfolio with the acquisition of eBioscience.
The acquisition is expected to boost Affymetrix’s foothold in the fast-growing immunology, oncology and translational medicine markets, which represents an annual opportunity of approximately $2.5 billion.
Meanwhile, Affymetrix remains focused on the successful commercialization of newer product lines (CytoScan, Axiom and QuantiGene lines, as well as eBioscience products). Despite a tight academic funding environment, we believe that the company’s product portfolio strength and a string of contract wins will propel growth in 2015.
In Phase III (2015-2016) of the program, Affymetrix aims to strengthen its balance sheet that will provide flexibility required to pursue strategic acquisitions. We believe that the successful execution of the third phase will not only improve liquidity but also enhance the competitive position of the company against the likes of Illumina (ILMN), Agilent Technologies (A) and Bio-Rad Laboratories (BIO).
Currently, Affymetrix sports a Zacks Rank #1 (Strong Buy).
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