William Blair & Co. Reiterates Market Perform on Meridian Bioscience (VIVO)

William Blair & Co. is out with a research note this morning, where it reiterates its Market Perform rating on Meridian Bioscience Inc. (NASDAQ: VIVO); it did not provide a price target.

The WB analysts said, “Meridian reported a lackluster third quarter that looked a lot like the second quarter; however, we see glimmers of light that may indicate a resolution to some lingering challenges may be on the horizon. The company once again missed both top- and bottom-line earnings and indicated that full year 2010 numbers would fall at the lower end of the revenue ($145 million to $153 million) and earnings per share ($0.70 to $0.80) ranges it had previously provided. As discussed below, we lowered our estimates to the absolute bottom of these ranges and view these as realistic numbers. We are also slightly tweaking our 2011 numbers lower, though see some things that are developing that could lead to 2011 being a year of a return to growth (though admittedly off of an easy comp).”

They further noted, “In the most recent quarter, Meridian pointed to the same challenges that it has faced over the past year as being large contributors to the weak quarter, including 1) the continued deterioration of the U.S. rapid testing market for C. difficile (in favor of molecular), 2) the lack of an influenza season, and 3) the poor performance of its European business. We believe that the recent approval of the company’s own molecular C. difficile product, illumigene, along with the purchase of U.K.-based Bioline (announced concurrently with third-quarter results), could help to resolve two of these issues.”

The WB analysts also said, “We do not think it is much of a stretch to say that illumigene is the most important product launch in the company’s history, as it has the potential to pare losses from rapid test revenues in the C. difficile category, while eventually brining the company into new markets with an attractive low-cost molecular diagnostic platform that we believe will find utility in today’s more-cost-conscious environment. Bioline’s product line of molecular biology reagents helps diversify Meridian’s Life Science business into molecular diagnostics and should be able to leverage Meridian’s existing relationships with existing industrial customers, which is an area Bioline had no exposure to previously. Therefore we see good opportunities for growth from this newly acquired business.”