Sector Snap: Life-sciences companies

Tag : Snap On Tools


Continued demand for drug research and development tools has likelytranslated into strong second-quarter profit for life-sciencescompanies, which begin reporting financial results next week.
Life-sciences firms make a range of testing and diagnostic productsused by companies to research and develop medical treatments.Several of the largest industry players include Madison, N.J.-basedQuest Diagnostics Inc. and Milford, Mass.-based Waters Corp.
Overall, the industry's quarterly profits will meet or beat WallStreet expectations, says Leerink Swann & Co. analyst Isaac Ro.
"The second quarter is typically a seasonally strong period forlife science tools spending and we saw no major disruptive forcesduring the quarter," he wrote in a note to clients.
Thomas Weisel Partners analyst Peter Lawson expects a weak dollarand more business in emerging markets like China and India to helpboost the sector's results.
Palo Alto, Calif.-based Varian Inc. opens earnings season for thesector on Monday and Leerink's Ro expects the company to meet theconsensus forecast of 67 cents per share. The company will likelycontinue benefiting from broader global demand, he said.
Varian shares rose 94 cents, or 2 percent, to $50.28 in afternoontrading.
Waters Corp. also is expected to meet analysts' average forecastfor profit of 71 cents per share when it reports results July 22,Ro said, based on the strength of its diagnostic tools.
Waters shares fell $1.40, or 2.2 percent, to $63.46.
Carlsbad, Calif.-based Invitrogen Corp., which makes moleculartesting tools used in biotech drug development, among otherproducts, reports results July 24 and could top Wall Street's 56cents-per-share forecast by 3 cents. The company is in the midst ofbuying Foster City, Calif.-based Applied Biosystems for $6.4billion in a move to combine the companies' variety of medicalresearch tools.
Also poised to top expectations, Ro said, is Wilmington,Mass.-based Charles River Laboratories International Inc. Heexpects the company to beat forecasts of 73 cents by a penny.
"We came away from Charles River's June 4 investor meeting with apositive impression of (the company's) new capacity inMassachusetts, Nevada and Canada," Ro said. "The company iswell-positioned to capture the long-term outsourcing opportunitiesfrom the drug industry."
Invitrogen shares rose 93 cents, or 2.2 percent, to $41, whileCharles River shares rose 42 cents to $64.71 in afternoon trading.
Looking ahead, Thomas Weisel's Lawson said the Asian markets,including China and India, will continue to represent a largerportion of revenue for life sciences companies along with clinicalresearch organizations.