Let me guess, a 1.8 million contract is worth 175 million increased market cap? yeah baby. Let me buy more. NOT!
Ok, kidding aside, let's get real folks, this puppy got lucky. CNBC accidently reported a 1.8 BILLION dollar contract. The stock rocketed and CNBC later corrected. Now the stock is correcting as it so should. The contract was worth about 1/2 point. 1 point for overreaction. It 's up 7 so I'd hate to be long overnite.
worldfinancenet.com
Automated genomic microanalytic instruments
The combination of microfluidics and computer technology has sparked a series of miniaturized genomic analytic instrument systems. These systems make DNA analysis cheaper, faster, and more reliable. Cepheid is the latest in a series that was started in ’99 with Caliper Technology.
Cepheid introduced its first product, a DNA testing system, in 5/00. The system conducts DNA tests in about 25 minutes. Like most of the microfluidic analytic instrument makers, the firm has two revenue streams. One is from the systems themselves. The second and potentially more lucrative is from the testing consumables. While the firm has developed its own manufacturing facility, it has partnered with Fisher Scientific for distribution.
Since the firm is only now emerging from development, performance has been negligible. Most revenues have been provided by government and private research grants. Product sales have been minimal with $159,000 reported in 4Q’99 and another $151,000 in 1Q’00.
Valuations in this sector have been erratic and suggest a growing saturation. Quiagen recently traded in the upper half of its 52 week range, while Affymetrix and Nanogen were in the lower half. Recent IPOs may add some further perspective.
Caliper Technology was a $72 million deal offered on 12/15. Offered at $16, it closed at $39.25 for a 145.3% first day. It recently traded at $44.50, adding 13.4% in the aftermarket.
Sequenom was a $137.8 million deal offered on 2/1/00. Offered at $26, it closed at $79.25 for a 204.8% first day. It recently traded at $34.50, off 56.5% in the aftermarket.
Aclara Biosciences was a $189 million deal offered on 3/21/00. Offered at $21, it closed at $32.13 for a 53% first day. It recently traded at $28.63, off 10.9% in the aftermarket.
Luminex was a $76.5 million deal offered on 3/30/00. Offered at $17, it closed at $22.88 for a 34.6% first day. It recently traded at $30.56, adding 33.6% in the aftermarket.
Orchid Biosciences was a $48 million deal offered on 5/5/00. Offered at $8, it closed at $10.94 for a 36.8% first day. It recently traded at $12.69, adding 16% in the aftermarket.
Genomic Solutions was a $56 million deal offered on 5/5/00. Offered at $8, it cl;osed at $8.38 for a 4.8% first day. It recently traded at $8.03, off 4.2% in the aftermarket.
Reflecting the uncertainties of this sector, pre-offering demand has been reported as moderate (Street Scoop 2 star rating).
After a strong start, this sector is rapidly saturating. As a late entry, the valuation outlook for Cepheid is guarded. While the firm’s partnership with Fisher Scientific is encouraging, this is a highly competitive field and Fisher’s marketing power may be neutralized. And despite the introduction of a product, the firm has yet to demonstrate its ability to compete successfully. Consequently, it is still unproven. The recent rebound in the biotech sector may add interest, but we expect a mild reception (e.g., 5%-25%) followed by erosion. |
