Life Technologies (LIFE) released earnings yesterday after
market close, which were in line with analysts’ estimates and the stock has
risen about 1.5% in trading today. Fourth quarter revenue came in about at 999 million, while EPS came in at $1.11
per share, increasing 6% year over year. Life Technologies has now delivered
revenues and EPS growth for 13 consecutive years, while still fighting
uncertainty in NIH budgeting and a weak Euro. Operating margins expanded to
29.2% in the fourth quarter, and $662 million in free cash flow allowed them to
reinvest into the company and return much of that cash to shareholders by
repurchases.
LIFE continued to build out their diagnostics business,
increase their presence in China and Singapore,
and see a higher than expected demand for the Ion Torrent genome
sequencers. They continued to build a platform to become a important provider
of tests and information for physicians around the world by putting together a
great management team and teaming up with key companies that has allowed them
to launch a lab-developed lung cancer test. We continue to be positive on their
diagnostics business, especially with their Ion Torrent bench top sequencer
selling so well, which management sees continuing into 2013.
It should be noted that since inclusion in the portfolio,
LIFE has returned about 30%, partly based on recent rumors that buyout firms
such as Blackstone, Bain Capital, and KKR are in talks to acquire them.
Furthermore, recently it was rumored that Thermofisher is in talks to buy them.
This sent their stock up to around $65 per share, where many investors see the
potential for a buyout. With earnings that came in around expectations, there
is little reason to think that the stock will drop off to past levels in the next
few months, unless of course nothing comes to fruition in terms of finding a
buyer, which seems unlikely given the rumored demand.
Going forward, management expects revenue growth to be in
the range of 3% to 5% for 2013 driven by a continued strength in Ion Torrent
sales and their diagnostics business. They have continued to decrease their
exposure to government and academia, while their low end of revenue accounts
for possible sequestration in NIH budgeting. They expect EPS in 2013 to range
from $4.30 to $4.45, and expect a very strong year going forward. Management
has always provided great guidance on the company and has continually met
expectations despite headwinds from core businesses in Europe and amid
uncertain academic and government budgets. They seemed very positive during the
conference call and we expect a positive first quarter for them given a
slightly more positive macroeconomic background. We continue to watch their
performance and any news about their current buyout situation very carefully.
No comments:
Post a Comment