In-Line Quarter for Luminex

| About: Luminex Corporation (LMNX)

Luminex Corporation’s (NASDAQ:LMNX) first quarter 2010 earnings of 5 cents per share were in line with the Zacks Consensus Estimate. The company earned 4 cents (excluding special items) in the year-ago quarter.

Total revenues for the reported quarter climbed 30% year over year to $33.3 million. Revenues from the Technology segment came in at $25.2 million as against $21.1 million in the year-ago quarter. Assay group sales for the quarter came in at approximately $8.1 million, as against approximately $4.5 million in the comparable quarter of 2009.

The company shipped 197 systems in the quarter. Cumulative systems shipments stood at 6,964 at the end of the quarter, up 14% from the year-ago period.

Income from operations in the quarter climbed to $3.7 million from approximately $1.6 million in the year-ago quarter. Operating income for the Technology Group increased to $4.3 million from $3.5 million in the same period last year. However, the loss at the Assay Group was approximately $0.6 million as against the loss of $1.9 million a year ago.

Operating expenses for the reported quarter climbed approximately 19% year over year to $19 million. Research and development spend was $5 million for the first quarter of 2010, up 7.6%. Selling, general and administrative expenses jumped 23.7% year over year to $ 14.1 million in the reported quarter.

The increase was primarily attributable to the costs associated with the increase in headcount in the technology segment. Furthermore, costs associated with the expansion of the company’s assay development activities and pipeline also contributed to the increase.

The company exited the quarter with cash and cash equivalents of approximately $87.2 million as against approximately $70.7 million in the year ago quarter.

Revenue Guidance Backed

The company reaffirmed its revenue guidance for fiscal 2010. Luminex, which develops, manufactures and markets proprietary biological testing technologies with applications throughout the life sciences industry, continues to expect 2010 revenue in the range of $138 million to $148 million.

Our Take

Currently we are Neutral on Luminex Corporation, which is based in Austin, Texas. We remain concerned about the company’s dependence on partners which have inherent risks and the highly competitive industry. However, Luminex’s wide range of products pleases us.

In March 2010, Luminex and Northrop Grumman Corp. (NYSE:NOC) agreed to create next generation autonomous biodetectors for monitoring the environment and alerting authorities regarding the release of potentially harmful airborne agents. We believe that the broad product portfolio will drive growth in the coming quarters.

Furthermore, the company’s significant international presence is also encouraging. Additionally, Luminex has an interesting pipeline. Should it successfully develop, the company can look at further growth.

Our Neutral long-term outlook on the stock indicates that it will perform in line with the overall US equity market over the next six to twelve months. We advise investors to retain the stock over this time period.