On Jun 30, 2015, Zacks Investment Research raised Affymetrix Inc. AFFX to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
The upgrade primarily reflects a stellar first quarter of 2015, in which Affymetrix beat the Zacks Consensus Estimate on both fronts. This marks the fifth straight quarter of a positive earnings surprise at the company. Notably, first-quarter earnings surged an impressive 233.3% on a year-over-year basis riding on robust sales growth and expanding margins.
Affymetrix generated year-over-year revenue growth for the seventh consecutive time, driven by strong performance across the genotyping and reproductive health businesses. We believe that the consistent revenue growth reflects the company’s strategy of diversifying revenues and focusing on new market opportunities.
The genetic analysis business continues to be the primary growth driver for the company. Moreover, we feel that the recent Biobank collaboration with Toshiba Corp will open up new opportunities for Affymetrix and help the company gain significant market traction, going forward.
Further, Affymetrix recently acquired assets of Hercules, CA-based Eureka Genomics – a developer of cost-effective, low- to mid-plex, high throughput genotyping assays. Notably, the acquisition will extend the company’s product offerings enabling it to support more applications for its current customers as well as new customers.
In addition, the rollout of new products like PrimeFlow RNA Assay and Concurrent Molecular Analysis Profiling (CoMAP) capability will help drive top-line growth and enhance the long-term prospects of Affymetrix.
However, recent foreign exchange movements may impact top-line growth in the near term.
Estimate Revisions
The Zacks Consensus Estimate for fiscal 2015 climbed by 5 cents to stand at 33 cents per share over the last 60 days. Meanwhile, for fiscal 2016, the Zacks Consensus Estimate rose 4 cents to 38 cents per share over the same time frame.
Other Stocks to Consider
One may also consider other favorably-ranked players in the med-biomed/gene industry like Cambrex Corp. CBM, China Biologic Products, Inc. CBPO and Emergent BioSolutions Inc. EBS. All the stocks carry the same Zacks Rank as Affymetrix.
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