Life Technologies (LIFE)
is a bit like the pickaxe sellers in the gold rush days. It doesn’t do the work of research directly, instead focusing on creating the tools that bioscience researchers need to make the next breakthrough discovery. As such, its fortunes rest less on a single discovery and more on the continuation of demand for systems and supplies in the fast-growing biotech and life sciences fields.
Life Technologies is a global life sciences company dedicated to improving the human condition. Its systems, consumables and services enable scientific researchers and commercial markets to accelerate scientific exploration, the company says, leading to discoveries and developments that improve quality of life. Its products are also used in forensics, food and water safety, animal health testing and other industrial applications.
Life Technologies delivers a broad range of products and services, including systems, instruments, reagents, software, and custom services, management said in a recent filing. The portfolio of products includes technologies for capillary electrophoresis-based sequencing, next-generation sequencing, PCR, sample preparation, cell culture, RNA interference analysis, functional genomics research, proteomics and cell biology applications, as well as clinical diagnostic applications, forensics and animal, food, pharmaceutical and water testing analysis.
Life has a workforce of approximately 10,400 people, a presence in more than 160 countries, and owns or has exclusive license to more than 4,000 patents as of Dec. 31, 2011.
“Our approach over the last few years has been balanced as we have returned over 50 percent of our cash to equity and debt holders and used the remaining 50 percent to invest in acquisitions to support key franchises or expand into new markets,” LIFE Chairman and CEO Gregory T. Lucier told analysts in a recent call.
“In any given year, we may have to pay down more debt or find strategically interesting acquisitions that could skew this ratio. But we are committed to a balanced approach going forward.”
Life Technologies has a market cap of $7.58 billion in a sector, life sciences tools and services, where the average company size is $1.24 billion. Its trailing 12-month P/E ratio is 18.71 and its five-year projected price-to-earnings-growth (PEG) ratio is 2.12.
Its projected earnings per share growth for the coming year is 7.96 percent, compared to a sector average of 14.24 percent.
Analysts are positive on LIFE, with buy or outperform calls from Leerink Swann, Citigroup Investment Research, Jefferies, Credit Suisse, UBS, Standard & Poor’s Equity Research, and RBC Capital Markets.
“We believe the shares are attractively valued at a recent 11.0X our 2012 EPS estimate, below peers and historical levels.We believe LIFE is well positioned within its end markets, with a solid platform for expansion in high growth markets within genomics and cell biology, and we see significant market potential within the applied clinical end markets for its new PGM instrument,” S&P analysts wrote early May.
“However, the price points for these machines are significantly lower at $50,000 to $80,000, compared to its SOLiD sequencing platform, which sells for $500,000, but within a smaller end market. Competition for next-generation sequencing is intense, which will pressure pricing.”
Life Technologies next reports on July 26.
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