BioRad Laboratories' recent acquisition of Pasteur Sanofi Diagnostics will increase its Laboratory Diagnostic revenue substantially and has the potential for significant increases in earnings per share as well.
Here's why: 1. The acquisition was financed with debt, leveraging the company with limited dilution of equity; 2. the combined entity has potential to achieve economies of scale for operating efficiencies; 3. independent customer sets may allow the company to attain higher volumes through cross-selling; 4. expected increases in government spending in biological and health sciences in the US, Europe and Asia should boost business volume; 5. front end costs may negatively impact eps in the short term in favor of longer term earnings growth.
Things are certainly changing at BioRad. Where will these shares trade a year from now?
Dave Chanoux |
