FOCUS-Cytyc shares fall but analysts upbeat
Reuters Story - January 28, 2000 17:29
BOXBOROUGH, Mass., Jan 28 (Reuters) - Cytyc Corp. shares dropped sharply on Friday after the medical test maker's fourth-quarter profits fell short of expectations, but analysts remained upbeat about the company.
Cytyc shares were down 6-3/16 at 58-9/16 in afternoon trade and touched a low of 47-5/8 earlier in the day.
On Thursday the company reported a big rise in earnings and revenues and a doubling of market share for its marquee Pap smear product ThinPrep, but earnings per share fell short of Wall Street forecasts.
"I am appalled by the capital markets' reaction to this," Kurt Kruger of Banc of America Securities said of the stock's decline. "This company has never been in better shape. They had a very upbeat conference call and endorsed very aggressive numbers for this year."
Cytyc reported net income of 15 cents per diluted share, 2 cents below the consensus estimate of analysts polled by First Call/Thomson Financial.
Income from operations was $2.25 million, compared with a loss of $386,000 in the year-earlier period. Sales rose to $24.7 million from $14.6 million.
A string of positive announcements in recent weeks had led several analysts to raise their price and earnings forecasts for Cytyc and lifted hopes among investors that fourth-quarter earnings would top Wall Street estimates.
The announcements included the recent news that Quest Labs had agreed to exclusively use the company's ThinPrep product for three years.
"ThinPrep is sweeping the country and we expect them to control 30 percent of the pap smear market for the year 2000," Kruger said.
Ronald Opel of H.C. Wainwright & Co. was also upbeat about Cytyc and suggested that part of the sell-off in the stock was the aftermath of speculative buying.
"It did that because it had a high speculative content in the valuation," he said. "It's selling for 50 to 60 times current-year earnings according to my figures...when interest rate worries arise, these are the first companies to suffer."
Opel also said the competitive environment would begin to be less favorable for Cytyc in a year or two as competitor TriPath Imaging Inc. hits its stride in marketing its recently approved Pap test product.
"They (Cytyc) can continue to grow their market share but it's not clear they can grow it by 50 percent a year as they have been doing," the analyst said.
marketwatch.newsalert.com
Analysts could have picked 0.12 EPS and we would have been estastic. At least I don't have to answer angry shareholders like them.
Jack |
