Well, TrickleMavens, it's earnings time in trickle land again. There have been fewer warnings than the last q. One of the early reporters is MDCC. I believe I posted their PR a few days back, and I listened to the CC last night. I was paying special attention to comments about the macro environment. MDCC sells both high end instrumentation in the form of FLIPR workstations that cost over 300K a pop and consumables for them and other applications. So they see most of the trickle playing field. Management reports that high end instrumentation is not selling well, but that consumables are solid. Most of Asia and Europe are slow -- Europe decelerating noticeably -- with Japan being the bright spot.
One cryptic comment -- which a questioner tried unsuccessfully to get color on -- was that MDCC saw customers moving away from funding screening, and towards funding more clinical trials. If this is so, the implications for biotech and trickle investors alike are large; this constitutes an important industry trend. This means pharmas really have had enough of targets (as some, such as Miljenko, have already pointed out) for a while, and biotechs whose products address processes further downstream in drug discovery should have better chances. Note the chemistry deal DPII struck with Merck this morning as an example.
Getting back to MDCC specifically, their quarters tend to be "back end loaded" (MDCC likes the term "hockey stick" to describe the graphical representation of this characteristic). So they claim to be especially hurt by the events of September, though they see early signs of solid recovery in bookings so far this month. Again, given the back end loading, it's hard to read a lot into that.
MDCC has been beaten up pretty badly since this report. In part because of the fact that they missed revs by 2 or three million, and in part, I imagine, because of that comment about screening versus clinical trials. Perhaps it's a good thing I loaded Trickle up on MDZ, which has a large CRO component. In any case, Trickle notes that MDCC has pierced spring lows since this report, but is holding not too far below them this morning. That their guidance indicates excellent value in terms of foreward PEG ratios, but are some FLIPR sales that might not happen be part of the guidance? If so, there is some risk to those numbers; I didn't hear a question about that.
'01 guidance is 93M in revs for $.42 - $.44 in EPS, while '02 guidance is for 95 to 105 million in revenues for eps of $.60 to $70. This yields a foreward PE of roughly 35 versus a growth rate of 40% to 50%. Trickle is tempted to bottom fish here.
Next up: TECH.
Cheers, Tuck |
