Spekulatius,
Problem is, I can't figure out which of these companies with the small revenue bases won't execute. Leaning towards shorting the ones hawking capital equipment is wise, though, as IVGN reported no slowing in their consumables business. I would see if BDAL reports anything disappointing after repeatedly saying they're chugging along OK. Their earnings are in the pennies, so lots of volatility there. You might even short it before earnings if WAT disappoints with guidance today (don't get greedier than high single digits, though).
I did listen to IVGN's call.
- They did well despite currency impacts, which they see as ongoing but of minimal impact. Hit the high side of the range for their revenue numbers, $160.7 million.
- Products dependent on instruments make up less than 4% of their line, so no problem for IVGN and other such companies.
- They noted that the cell culture biz had a strong quarter, well ahead of average growth, but that revenues tended to fluctuate a lot in that segment. This could be a tough benchmark for future quarters.
- They are seeing strong growth in their cloning, amplification, genomics resources, and custom DNA businesses. Also, Oligo biz (EOS munch) looking strong.
- They see margins improving (from this Q's imporved 53% to an even better 56%) and flat R&D for a few Qs as they begin the end of disgeting Life Technologies.
- It seems as though they've done a good job with that munch. Inventories are tightenting up, product mix is mostly readjusted. They are still shuffling some employees from the R&D center that is being closed in Maryland (which will bump cash by $50 million), but otherwise are about through with charges and other changes arising from the munch.
- They are increasing investment in sales and marketing, so possible upside to current revenue guidance
- Molecular Biology segment ($101.4 million this Q) growing at ~18%, Cell Culture at 6% (though this Q it was twice that!)
In sum, it looks like you're right to be wary of the makers of big instruments, but the consumbales folks are doing fine, and IVGN should hang in there at these prices. Had VARI resisted the sell-off, I would have mentioned that one, but it doesn't have lots of downside, either.
Cheers, Tuck |
