LifeCell Corporation: Plenty of Room to Run

| About: LifeCell Corp. (LIFC)

Yesterday, LifeCell Corporation (LIFC) announced that it received clearance from the FDA to market a tissue porcine sourced tissue graft to be used in breast reconstruction and hernia repair. This news sent the stock soaring over 5%. The company had already been performing similar procedures from human derived skin (cadaver sourced).

LifeCell is uniquely positioned in an industry with no real viable competitors for this specialized service and the demographics support continued growth. LifeCell largely escaped the ire of lawmakers and the public following the gruesome body-parts-for-money scandal from last year since they were not complicit in the activities where some people were selling body parts known to be infected with cancer, hepatitis and other afflictions which could be passed from donor to recipient. The offenders have been identified, tried and sued and LifeCell is unlikely to face additional liability from lawsuits that isn't already factored into the stock price due to the amount of time that has elapsed.

The question now is whether or not you missed the boat following the 5% run-up. I believe there's plenty of room to run and here's why. The stock was at these levels as recently as last fall, when it tumbled 22% in a day on a lowered earnings forecast. Since then, the stock
has gradually recovered, followed by the run-up yesterday. The recent announcement only bolsters the company's previous strong performance and, as everyone knows, the Health/Biotech stocks trade on pipeline growth way out in the future. Even though LIFC won't see an immediate impact to their bottom line, 2008 is going to be a year of significant earnings increases. No competition and growing demographic equals a buy to me, especially when the stock has still not even breached its previous highs.

The company has been a stellar performer over the past 5 years, up over 1000%. It's run by several former pharma executives. In fact, one of my peers interviewed with them recently and met the top brass. He was very impressed with their credentials, the yet-untapped market potential and their long-term business plan (he didn't take the job because they couldn't agree on salary, but apparently the options offered were nothing to balk at; he's probably kicking himself today!).

LIFC 1-yr chart


Disclosure: none