Why Affymetrix Inc. Shares Jumped
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Affymetrix advanced as much as 11% after the maker of life science tools and molecular diagnostic products announced preliminary fourth-quarter revenue guidance and received a price target upgrade from a Wall Street firm.
So what: Affymetrix said in an early morning press release that it anticipates reporting fourth-quarter revenue of $91 million, which includes a one-time payment of $5.3 million from a diagnostic partner. By comparison, Wall Street had anticipated Affymetrix would report just $82.6 million in revenue. For the full year, Affymetrix now anticipates revenue totaling $329 million. In response to the stronger-than-expected revenue projections, Maxim Group upped its price target on the company to $11 from $9.
Now what: Steady as she goes for Affymetrix, which has done a good job of reducing debt and returning to profitability (no matter how nominal) in fiscal 2013. We know that Affymetrix can reduce expenses and use its leanness to deliver profits; the big question moving forward is whether the company can organically grow product orders. Based on current estimates on Yahoo! Finance, and factoring in today's upside announcement, we're looking at flat year-over-year sales in 2014. Cost-cutting will only drive a company so high before shareholders get impatient. Tack on the fact that the federal health care spending budget is likely to contract and you have enough reasons to be somewhat skeptical of the magnitude of this latest rally in Affymetrix.
If you want a high-growth company you won't have to wait for, check out this latest selection from one of our top analysts!
Opportunities to get wealthy from a single investment don't come around often, but they do exist, and our chief technology officer believes he's found one. In this free report, Jeremy Phillips shares the single company that he believes could transform not only your portfolio, but your entire life. To learn the identity of this stock for free and see why Jeremy is putting more than $100,000 of his own money into it, all you have to do is click here now.
The article Why Affymetrix Inc. Shares Jumped originally appeared on Fool.com.Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong . Try any of our Foolish newsletter services free for 30 days . We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.