Giving Luminex the Benefit of the Doubt

Luminex (LMNX) looked like a great chart, until today's downgrade - showing once again this market is not easy at all. The stock was breaking out nicely 4 days in a row, ignoring yesterday's selloff, higher highs - lower lows; then BOOM - so much for the nice chart. The analysts are again surprising me with how much people react to their noise. I actually like the thesis behind this downgrade (universitites cutting research budgets) but it seems like an overreaction.

• Citing a survey that said that university-based researchers are seeing reductions in their budgets, investment bank Leerink Swann today downgraded several life science tool firms that it covers
• Among the firms it downgraded from “outperform” to “market perform” is Waters, which said last night that it expects lower revenues for its fourth quarter than it had previously predicted. The other firms downgraded to “market perform” are Varian, Bruker, and Luminex.
• The investment bank said that a survey of 117 university-based life science researchers found that 68 percent of them are seeing reductions in their budgets.
• “Not surprisingly, capital equipment was most often cited as the first thing to go. While we believe transformative technologies such as [next-generation sequencing] and genotyping arrays will continue to see good adoption, we believe basic lab equipment and high-end instrumentation will be challenged in the current environment.”
• Among the researchers surveyed, 45 percent said that DNA sequencing products were a high priority, which benefits firms such as Illumina, said Leerink Swann. The bank also cautioned that “high price tag” of the next-generation sequencing instruments “could pose a barrier for some new customers.”

As I eagerly await Obama to "stimulate" our universities with the unending pockets of China Treasury buying, I am adding here on this 12% drop, taking Luminex from 1.2% stake to 2.6% stake with purchases just over $20. Further, Luminex is in the "genotyping arrays" portion which the analyst is even saying should hold up.

The chart is very iffy, if it does not regain $21 in short order. But based on the strength exhibited over the past month in the chart, I'll give it the benefit of the doubt.

Boy, more buying in 1 day than most weeks.

Long Luminex in fund; no personal position