Analysts ended up with a bit of egg on their face last week when Genoptix Inc. (GXDX) reported earnings. In August we took a look at the company, noting that new customers were leading to significant revenue growth. The trend has continued with Q3 revenue coming in at $33.5 million – good for a 47% increase over last year. Analysts had been expecting earnings of $0.34 which were blown away by the actual $0.53 per share figure.

Management didn’t stop with an excellent historical record. The company issued guidance for the fourth quarter with full year revenue expected at $180 million and EPS of $1.60. This guidance caused analysts to jump to adjust their models and several research desks had to increase their estimates for 2009 earnings. In addition, the company expects to see 2010 revenue grow to $235 million – good for a 30% annual increase.

Tuesday's Wall Street Journal had an article that asked the question "Can Rally Run without Revenue?" Is the revenue situation really that bad?

Let's take a quick look at some the data compiled through the Alert HQ process.

Healthcare has been a controversial topic for US investors. Reforms to Medicare and regulations on private insurers will likely have an industry altering effect. There have certainly been some land mines to dodge when investing in this sector, but profitable positions have also been available. Take for instance Amedisys Inc. (AMED) which is up about 33% since the stock was recommended in here in April. Amedisys is positioned to actually save Medicare costs and investors are bidding the stock higher in anticipation of the strength.

Today we’re going to look at a specialty diagnostic company which also has the potential to shine brightly even in a reformed health care environment. Genoptix Inc. (GXDX) is essentially a diagnostic laboratory for oncologists and hematologists, and the company specializes in testing intricate blood and bone marrow samples for cancer.

Q2 2009 Earnings Call

July 30, 2009; 05:00 pm ET

We’ve had quite a spring rally in the last two months. It’s hard to believe that the S&P 500 has rallied as much as 40% since the panic levels in March, and many individual issues have given investors chances to double or triple their money in just a few short weeks. We are now beginning to hear whispers of economic recovery and new bull markets. (Actually, by definition, this latest rally constitutes a bull market because it exceeds a 20% gain - but don’t try to explain that to investors who are still 41% below the October 2007 high).

At ZachStocks, we have had plenty of opportunities to participate in the gains along the way. Continental Resources, Inc. (CLR) has risen 117% since our post in early March. Intrepid Potash, Inc. (IPI) was also a recommended long position and has returned 93% since our discussion. And The Blackstone Group L.P. (BX) has risen 147% since we discussed the company just after the rally began. At the time, the opportunities for aggressive trades were very clear. However, today’s market is getting to the place where the risk begins to cloud the picture. In the ZachStocks Growth Model we are taking some of our investment capital off the table, and looking toward some more defensive positions to protect our gains.

Q1 2009 Earnings Call

April 30, 2009 5:00 pm ET

At the end of each trading week, Hillbent scans for the equity market for potential anomalies which exhibit extremely oversold and overbought conditions. Past observations have revealed that such candidates may experience reversal corrections to the upside or downside once the market reconfirms that their fundamentals remain solidly intact or relatively poor. From a contrarian perspective, these lists may also serve as a precursor to changes in institutional sentiment and underlying fundamentals.

(The purpose of this report is not to provide specific recommendations, but instead serve as a time-saving reference tool and starting point for investment ideas as the upcoming trading week unfolds. Of course, the results generated are not always perfect and users are strongly encouraged to perform their own due diligence on these names. Note that overbought and oversold conditions are based upon proprietary algorithms and quantitative models instead of conventional technical analysis indicators. As a supplement to this report, please refer to our Market Condition Summary to determine if market direction trends support a bullish or bearish investment bias over short-term, intermediate, and long-term timeframes.)

At the end of each trading week, Hillbent scans for the equity market for potential anomalies which exhibit extremely oversold and overbought conditions. Past observations have revealed that such candidates may experience reversal corrections to the upside or downside once the market reconfirms that their fundamentals remain solidly intact or relatively poor. From a contrarian perspective, these lists may also serve as a precursor to changes in institutional sentiment and underlying fundamentals.

(The purpose of this report is not to provide specific recommendations, but instead serve as a time-saving reference tool and starting point for investment ideas as the upcoming trading week unfolds. Of course, the results generated are not always perfect and users are strongly encouraged to perform their own due diligence on these names. Note that overbought and oversold conditions are based upon proprietary algorithms and quantitative models instead of conventional technical analysis indicators. As a supplement to this report, please refer to our Market Condition Summary to determine if market direction trends support a bullish or bearish investment bias over short-term, intermediate, and long-term timeframes.)

At the end of each trading week, Hillbent scans the equity market for potential anomalies which exhibit extremely oversold and overbought conditions. Past observations have revealed that such candidates may experience reversal corrections to the upside or downside once the market reconfirms that their fundamentals remain solidly intact or relatively poor. From a contrarian perspective, these lists may also serve as a precursor to changes in institutional sentiment and underlying fundamentals.

(The purpose of this report is not to provide specific recommendations, but instead serve as a time-saving reference tool and starting point for investment ideas as the upcoming trading week unfolds. Of course, the results generated are not always perfect and users are strongly encouraged to perform their own due diligence on these names. Note that overbought and oversold conditions are based upon proprietary algorithms and quantitative models instead of conventional technical analysis indicators. As a supplement to this report, please refer to our Market Condition Summary to determine if market direction trends support a bullish or bearish investment bias over short-term, intermediate, and long-term timeframes.)

Q4 2008 Earnings Call Transcript

February 26, 2009 5:00 pm ET

With HealthShares closing shop at year-end, including the former Diagnostics fund, investors who are interested in the space can create their own ETF comprised of companies from the ETF Innovators Preventive Medicine and Emerging Diagnostics Indexes. Below is a list of companies which have stocks listed for trading in the U.S. at over $1/share with a market cap of less than $10B, focusing on smaller companies which are more leveraged to diagnostics and represent possible takeover targets for larger players such as Roche (RHHBY.PK), Abbott Labs (ABT), and Johnson & Johnson (JNJ).

However, the smaller size for many of these companies also increases the investment risk, as illustrated by the plunge of over 80% in AspenBio Pharma (APPY) yesterday on disappointing preliminary clinical trial results for AppyScore as a screening test for appendicitis. Despite the massive decline yesterday, APPY rose by about 27% in the past month (from $6 on 12/16/08 to $7.63 on 1/16/09), providing many chances for investors and traders to take profits or at least let only their profits ride into the major binary event for the stock.

Healthcare investing trends in 2009 and beyond will be affected by the new administration's plans for healthcare reform, which are summarized at the Change.gov website. A key feature of the plan is making health insurance coverage possible for all Americans using the existing network of insurers and providers. The plan relies on tax credits for small businesses and eligible individuals to help pay the cost of health insurance premiums. Also, large employers which do not offer health insurance benefits would be required to contribute a percentage of their payroll toward the cost of healthcare for their employees.

Insurance companies would be required to cover pre-existing conditions and the insurance market will be reformed to eliminate anti-competitive practices, including the creation of a National Health Insurance Exchange with a variety of affordable health insurance options. Investments in health information technology (Health IT) will be made to encourage e-prescribing and electronic recordkeeping to reduce the incidence of medical errors and encourage the portability of health information.

Visit the Change.gov website to submit your ideas on healthcare reform as the new Obama-Biden administration prepares for their inauguration on January 20, 2009. Tom Daschle will serve as Secretary of Health & Human Services and is encouraging the nation to share their healthcare experiences and suggestions to improve and reform healthcare in the U.S.

A key feature of the plan is making health insurance coverage possible for all Americans using the existing network of insurers and providers. The plan relies on tax credits for small businesses and eligible individuals to help pay the cost of health insurance premiums. Also, large employers which do not offer health insurance benefits would be required to contribute a percentage of their payroll toward the cost of healthcare for their employees.

The accompanying table presents statistics and the top 15 rated companies in the ETF Innovators (ETFI) Preventive Medicine Index. The index includes U.S.-listed companies with market caps of $200M-$60B which are engaged in the following healthcare business segments: vaccine makers, diagnostics, lab services, and diabetes care.

Genoptix (GXDX) broke its 200 day moving average just over a week ago after being one of the last holdouts (holding above) .. .that was at $31. In this market, when you break support, you die a quick death - it's now down to $26. This stock was over $41 three weeks ago after a good earnings report [Nov 7: Genoptix -Market Likes What it Hears] showing once again, no trend lasts, and even if you buy "winners" you get your head handed to you 90% of the time in this market. Despite a report the market liked, the stock is now down 37% in three weeks. And that's one of the "strong stocks".

Looking at a long-term chart, the stock bottomed in early July around $25, so I am hoping this creates a "double bottom" situation again. A close below $25 would be bearish as this condition would be broken, so we'd sell assuming there is more downside from there. But for now, we'll increase exposure from 0.2% of fund to 1.4%, with purchases just over $26.00.

by Lou Basenese

Over one million jobs vanished this year. Retail sales cratered for the eleventh consecutive month. Auto sales, and for that matter automakers, are headed for the junkyard. And there’s no sign of consumer confidence anywhere.

Q3 2008 Earnings Call Transcript

November 6, 2008, 5:00 pm ET

In addition to bullish outlooks for generic drugs and Health IT, President-Elect Obama's healthcare plan is set to focus on public health initiatives and mandated coverage of preventive services such as cancer screenings. The accompanying table (click to enlarge) presents statistics and the top five rated companies in the ETFI Preventive Medicine Index, including vaccine makers such as Emergent BioSolutions (EBS), diabetes care companies such as Novo Nordisk (NVO), diagnostic companies such as Sequenom (SQNM) and Myriad Genetics (MYGN), and lab services companies such as Genoptix (GXDX), LabCorp (LH), and Quest Diagnostics (DGX).

Concerned that my Morningstar (MORN) stock was acting 'sickly,' I chose to switch out of this pseudo-financial stock and try something else for my holding. Looking through the list of top percentage gainers on the NASDAQ, I came across Genoptix (GXDX), which appeared to fit the bill.

I went ahead and purchased 161 shares of GXDX on August 14, 2008, (a peculiar number but divisible by 7 - my first partial sale amount) at $38.328/share.  However, GXDX immediately started to trade weakly, and not wanting to move from one weak stock to another, I went ahead and sold my 161 shares the same day (!) at $37.028.  Looking at the list of top % gainers on the NYSE that afternoon, I found Estee Lauder (EL) and purchased 140 shares at $49.87- but that is the subject of another blog entry.