$AFFX Hits 52-Week High on Stellar Q4, Positive Outlook – Analyst Blog

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Affymetrix Hits 52-Week High on Stellar Q4, Positive Outlook – Analyst Blog

Shares of Affymetrix Inc. AFFX scaled a new 52-week high of $12.49 on Mar 12, eventually closing lower at $12.36. This represents a strong one-year return of about 65.2%. The S&P 500 jumped almost 11% during the same period.

Affymetrix reported an impressive fourth quarter of 2014, generating year-over-year quarterly revenue growth for the sixth consecutive time. This also marks the fourth straight quarter of a positive earnings surprise at the company.

On average, this Zacks Rank #1 (Strong Buy) company has outperformed the Zacks Consensus Estimate by almost 78% over the last four quarters. We believe the stellar consistent quarterly results justify the recent bullish run. Moreover, management’s positive guidance for 2015 based on new product launches and partnership deals are attractive enough for investors.

Key Growth Catalysts

Affymetrix is a major provider of microarray technologies primarily used in the field of genetic research. However, declining demand for GeneChip Expression monitoring arrays has compelled the company to turn to growing markets of translational medicine, molecular diagnostics and applied markets such as agricultural biotechnology.

In addition, Affymetrix remains focused on the successful commercialization of newer product lines (CytoScan, Axiom and QuantiGene lines, as well as eBioscience products). Despite a tight academic funding environment, we believe the company’s portfolio strength and a string of contract wins will propel growth in 2015.

The genetic analysis business has been a key growth catalyst for Affymetrix, with 40% growth from the year-ago quarter level. Higher genotyping revenues reflect that the company has substantially gained from expanding its business into AgBio applications and partnering on large Biobank projects.

We note that the strategic partnerships with Toshiba Corp’s Healthcare Company and Binding Site Group will help Affymetrix gain significant market traction. Moreover, the rollouts of new products like PrimeFlow RNA Assay and Concurrent Molecular Analysis Profiling (CoMAP) capability will also help drive top-line growth.

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