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Wedbush Analyst Upgrades Luminex After Quarterly Results, New CEO

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In a report published Tuesday, Wedbush analyst Zarak Khurshid upgraded the rating on Luminex Corporation (NASDAQ: LMNX) from Neutral to Outperform, while raising the price target from $19 to $22, following the robust 2Q15 results.

Khurshid explained that the upgrade was prompted by “better execution, end markets, FCF plus our growing confidence in new CEO,” while adding that “the current multiple does not fully reflect the progress across most aspects of the business.”

2Q15 Results & 2015 Guidance

Luminex reported its 2Q15 results ahead of the estimates and the consensus. In a news release on its Investor Relations webpage, the company reported that its revenue increased 6 percent and assay revenue increased 22 percent from the 2Q14 levels.

Royalty revenue also rose 17 percent as compared to 2Q14, while the gross profit margin rose by a whopping 73 percent from the 2Q14 levels. Operating profit also grew, rising over 100 percent, driven by expense control and expanding revenues.

On the other hand, the settling of the lawsuit with the Life Sciences division on Enzo Biochem, Inc. (NYSE: ENZ) cost Luminex $7.1 million, which negatively impacted the 2Q15 EPS by $0.12, leading to non-GAAP EPS of $0.06.

“Our second quarter results reflect the Company's strong performance across its business, including achieving the highest level of quarterly revenue in the Company's history,” said Homi Shamir, Luminex’s President and CEO, in the release.

Luminex also raised its full year 2015 sales and revenue guidance, while issuing its #Q15 revenue guidance in the range of $56 million to $58 million.

Upside Catalysts

According to Khurshid, one of the potential catalysts for the stock is the anticipated FDA approval of Aries at the Association for Molecular Pathology Meeting on November 5, 2015, along with potential “early customers newsflow.”

Aries is a fully automated and integrated platform that was submitted to the FDA in early July. Approval for the platform appears on track, with the launch expected in late 2015 and a full commercial launch of five tests in 2016.

“LMNX maintains best in group gross margins and is on track to post league leading FCF yield as well,” Khurshid added.

Latest Ratings for LMNX

DateFirmActionFromTo
Jul 2018CitigroupMaintainsNeutralNeutral
May 2018Deutsche BankUpgradesSellHold
Jan 2018BTIG ResearchInitiates Coverage OnBuy

View More Analyst Ratings for LMNX
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Posted-In: Wedbush Zarak KhurshidAnalyst Color Upgrades Health Care Price Target Analyst Ratings General

 

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