On Aug 19, we have updated our research report on Affymetrix Inc. (AFFX). We are impressed with the company’s strength in maintaining its earnings momentum after a period of continued losses. The company’s restructuring plan to focus on high growth markets is finally paying off as demonstrated by its bottom line growth in every quarter.
Affymetrix posted a robust 75% rise in adjusted earnings per share to 7 cents for the second quarter of 2014 from 4 cents in the same quarter a year ago and surpassed the Zacks Consensus Estimate of 3 cents.
Revenues in the quarter spiked 7.5% to $85.4 million and edged past the Zacks Consensus Estimate of $83 million. The upside was driven by strength in the company’s Genetic Analysis business unit (accounting for nearly 40% of the company’s revenues).
At the beginning of 2013, Affymetrix implemented a corporate restructuring plan, which will continue till 2016, intending to accelerate toward profitability. The plan focuses on realigning its product portfolio, stabilizing its core business, positioning the company for growth and increasing its profitability in an effort to offset a downswing in its underlying business.
Affymetrix upgraded its previously announced revenue and EBITDA guidance for 2014. The company expects to generate revenues of $340 million, in line with the current Zacks Consensus Estimate. The company also projects EBITDA margin in the range of 14 to 15%.
Currently, Affymetrix carries a Zacks Rank #2 (Buy). Other stocks that are also worth a look from the biomed/gene industry include Cambrex Corporation (CBM), China Biologic Products, Inc. (CBPO), and Epizyme, Inc. (EPZM). All of them carry a Zacks Rank #1 (Strong Buy).
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