Barron's: Invitrogen May Outperform An Already Strong Industry

Excerpt from our One Page Barron's Summary (receive it weekly by email by signing up here):

Positive Culture by Jay Palmer

Highlighted companies: Invitrogen Corp. (IVGN), Genentech Inc. (DNA), Qiagen N.V. (QGEN), Becton, Dickinson and Co. (BDX), Affymetrix Inc. (AFFX)
Summary: After missing earnings targets for a third time on August 3rd, Invitrogen Corp. (IVGN) shares trade at a discount (under 20 P/E) to other biotech stocks (up to 40 P/E). The company has an array of businesses that service many parts of the industry. CEO Greg Lucier says their aim is to grow, "so a research customer can start with cells and work down to genes and proteins and all the other elements of the human body, and never leave Invitrogen." Since 2000, the company has spent $3.4B on 17 acquisitions, and has doubled revenues over that time. With one exception the acquisitions have proceeded smoothly: BioReliance, who oversee tests on possible new drugs, has been the weak link in the chain, dropping revenues at the company's Cell Culture unit by 9%. The company is revamping BioReliance, and expects benefits to start showing up late this year or early next. Invitrogen's ace-in-the-hole is its BioDiscovery unit, which sells products and services for gene research, cell biology, drug discovery, stem-cell research, and DNA/RNA purification. Some see the present situation as a unique buying opportunity: Since Invitrogen supplies the basic tools of biotech, it will be difficult to separate the sector's forecasted growth from it. Barron's conclusion: 25% upside!
* Quick comment: Barron's enthusiasm for the downtrodden stock is not without logic. Other industry leaders, particularly Genentech Inc. (DNA) (which is a client of IVGN) consistently appear on analysts' lists of stocks with growth potential. The iShares NASDAQ Biotechnology Index ETF (IBB) allows investors to invest in the biotech industry, without having to be tied down to one or two specific companies.