Luminex Grows on Product Launches & Strategic Partnerships - Analyst Blog

On Nov 28, we issued an updated research report on Luminex Corporation (LMNX). We believe that this Austin, TX-based developer and manufacturer of proprietary biological testing technologies has an interesting product pipeline and will significantly benefit from new products like ARIES and NxTAG. However, it is exposed to competitive pressure and reimbursement risks.

Luminex is making considerable progress with its ARIES system and the NxTAG Respiratory Pathogen Panel, which should accelerate organic growth and drive market share expansion in the long run. Moreover, the company's strategic focus on cost control and favorable product mix continue to drive margins.

Luminex's ARIES system, scheduled to be launched in 2015, represents a major revenue opportunity for the company. By offering targeted testing on an ARIES system along with syndromic panels through the company's xTAG and NxTAG product lines, Luminex will have a strategic advantage to position itself as the only company offering laboratories a complete testing solution.

Moreover, Luminex has collaborative agreements with several companies, which should help expand the use of its products/technology. By leveraging its strategic partners' market positions along with distribution channels and marketing infrastructure, Luminex has been consistently expanding its installed instrument base.

However, Luminex operates in a highly competitive life sciences industry. The industry is characterized by rapid and continuous technological innovation. Currently, the company is facing significant competitive headwinds in the respiratory market. The molecular diagnostic market is also experiencing a momentary deceleration, owing to administrative issues related to reimbursements associated with the new molecular diagnostic code system established by the Centers for Medicare and Medicaid Services.

Luminex largely depends on the uptake of its latest offerings and pipeline products to drive growth in the near term. With no other significant growth drivers in the near term, slower market adoption of these offerings might considerably affect sales.

Additionally, budget sequestration in the U.S. aggravates the reimbursement risks for the company.

Currently, Luminex carries a Zacks Rank #3 (Hold).

Better-ranked medical instruments stocks include AngioDynamics (ANGO), Edward Lifesciences Corp. (EW) and Fluidigm Corp. (FLDM). While AngioDynamics sports a Zacks Rank #1 (Strong Buy), both Edward Lifesciences and Fluidigm carry a Zacks Rank #2 (Buy).