Earnings Preview: Immucor

| About: Immucor, Inc. (BLUD)

Immucor (NASDAQ:BLUD) is scheduled to report its third quarter fiscal 2010 results on March 31, 2010. The Zacks Consensus Estimate for the quarter is pegged at a profit of 28 cents.

Going by past trends, Immucor has surpassed expectations in the past four quarters. The company had a positive surprise of 20% and 7.69% in the first and second quarters of fiscal 2010, respectively, with a positive four-quarter average of 19.13%.

This means that, on an average, the company has topped the Zacks Consensus Estimate by 19.13% over the last four quarters. If third quarter earnings meet our expectation, it will represent a 3.7% year-over-year growth.

Immucor’s main products – traditional reagents, capture reagents and instruments have recorded robust growth in the past few quarters, a trend we expect to continue. Worldwide placements of Galileo and Echo, two of Immucor’s most important products should continue to drive growth.

Although Immucor has recorded a robust growth in its top line during the second quarter, its gross margin suffered due to costs related to the company’s Quality Process Improvement Project, targeted at establishing a better quality system.

We believe margin will remain under pressure in the forthcoming quarters as well, with the company spending more funds on the quality control project. During fiscal 2009, it spent approximately $2.4 million on this project and expects to incur another $6 million - $7 million in fiscal 2010. Operating expenses are also expected to increase with the rise in R&D expenses as it seeks to develop more advanced instruments.

Following the release of second quarter results, Immucor reaffirmed its fiscal 2010 revenue and earnings guidance, which are expected in the range of $322 million - $332 million and $1.10 - $1.17 per share, respectively. We currently have a Neutral recommendation on the stock.