piper KEY POINTS:
12/15/05
* Invitrogen announced this morning the acquisition for $5 million cash a T-
cell expansion technology called the "Xcelleration Process" from Xcyte
Therapies (XCYT).
* Xcyte has been partnered with Invitrogen's Dynal subsidiary. Anti-CD3 and
anti-CD28 monoclonal antibodies are attached to Dynal beads to expand T-
cells. This is a minor acquisition to expand Invitrogen's product offering
for immunotherapy research.
* At its analyst meeting yesterday, December 14, Invitrogen reiterated 4Q:05
guidance and stated that revenues should exceed $1.19 billion for the full
year.
* Further, management stated that 2005 proforma EPS should be at least $3.42,
and thus we remain comfortable with our $3.44 estimate for the year.
* Management also provided 2006 revenue guidance of $1.33-$1.35 billion, in
line with our total revenue forecast of $1.345 billion next year. Management
stated organic growth should be in the 6%-8% range for 2006.
* Invitrogen management guided proforma diluted EPS to $3.90-$4.10 in 2006. As
a result, this morning we raised our proforma diluted EPS estimate to $4.06
from $3.90, assuming the buyback of the remaining $275 million in
outstanding 2-1/4% convertible debt by year-end 2006.
* Invitrogen will continue to acquire growth with the goal of transacting
roughly the same dollar volume (~$500 million) in 2006, however in fewer,
larger deals. Specifically, Invitrogen intends to get closer to the patient,
to us meaning diagnostics. Management said they continue to prefer accretive
deals, which could provide upside to our EPS estimate.
PRICE TARGET AND JUSTIFICATION:
We reiterate our Outperform rating on Invitrogen and $89 price target based on
a 22x multiple to our 2006 proforma diluted EPS estimate of $4.06.
RISKS TO ACHIEVEMENT OF TARGET PRICE:
Among the risks associated with Invitrogen are delays or decreases in NIH
funding, causing lower spending at academic laboratories. Invitrogen may not
be able to acquire/license new technologies and products to maintain top-line
growth. Further, Invitrogen may not be able to recognize cost savings and
could miss EPS estimates.
Important Research Disclosures
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Analyst Certification - Edward A. Tenthoff, Sr Research Analyst
The views expressed in this report, including the Key Points and Risk sections
in particular, accurately reflect my personal views about the subject company
and the subject security. In addition, no part |
