Monday, January 13, 2014

Investing in DNA Gene Technology

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AFFX's preliminary revenue guidance for the fourth quarter came in ahead of expectations, sending the earnings estimates higher and the stock back to Zacks Rank #1 (Strong Buy) on January 8, 2014.

About the Company

Headquartered in Santa Clara, California, Affymetrix (AFFX - Trend Report) is a leading provider of microarray-based products and services to the global research community. The company utilizes its DNA chip technology in areas of gene expression, analysis, and clinical application to help treat infectious diseases, cancer, and other ailments.

Affymetrix has 1,100 employees globally and has a sales and distribution network across U.S., Latin America, Europe and Asia.

Excellent Fourth Quarter Preliminary Results and Third Quarter Results

AFFX announced its preliminary revenue for the fourth quarter of 2013, on January 7, 2014. The company expects total revenue of approximately $91 million (including a one-time licensing payment of $5.3 million) for the quarter and total revenue of approximately $329 million for the fiscal year.

Quarterly sales reflect a 7.8% increase from the year-ago level of $84.4 million. Further, both the quarterly and annual estimates were ahead of Zacks Consensus Estimates of $85 million and $322 million, respectively.

Earlier on October 30, 2013, the company reported its third quarter results. Non-GAAP net income was $0.05 per share, compared to a net loss of $0.03 per share, for the same quarter of 2012. The results handily beat the Zacks Consensus Estimate of $0.2 per share. Revenues rose 0.9% to $80.4 million, ahead of the Zacks Consensus Estimate of $79 million.

Positive Earnings Estimates Revisions

As a result of much better than expected operating/preliminary results, analysts have revised their earnings estimates for the company in the past few weeks.

Zacks Consensus Estimates for the current quarter and the current year now stand at $0.06 per share and $0.14 per share respectively, up from $0.04 per share and $0.11 per share, 60 days ago.

The Bottom Line

AFFX is a Zacks Rank #1 (Strong Buy) stock. The company also earned a (longer-term) Zacks recommendation of “Outperform”, based on its improved prospects. The stock was earlier featured as the “Bull of the Day’ on August 30, 2013. It is up almost 70% since then. However since the turnaround story appears to be working great, the stock still looks posed for further upside.

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