Earnings season is winding down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Sequenom is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed kneejerk reaction to news that turns out to be exactly the wrong move.
Genetic testing is a big potential growth area in the health-care industry, and Sequenom is a significant player in the genetic-testing niche. But can the company expand its existing offerings to take maximum advantage of the opportunity? Let's take an early look at what's been happening with Sequenom over the past quarter and what we're likely to see in its quarterly report on Thursday.
Stats on Sequenom
Analyst EPS Estimate
Change From Year-Ago Revenue
Earnings Beats in Past 4 Quarters
Source: Yahoo! Finance.
Will Sequenom pass the test this quarter?
Analysts have gotten slightly more optimistic about Sequenom's prospects in recent months, narrowing its loss estimate for the quarter by a penny per share and pushing losses $0.06 per share closer to breakeven for full-year 2013. But the shares haven't reflected any of that optimism, with a loss of about 9% since early December.
Contrary to that assessment, Sequenom actually had a lot of promising news early in the quarter. In November, the company said that its RentaGene AMD test was successful in predicting the progress of macular degeneration, and added that volume of its MaterniT21 test for Down syndrome had increased substantially. When the American College of Obstetricians and Gynecologists recommended a test for another condition that the MaterniT21 test can detect -- and which the company said in February it would now screen for -- the road looked clear for Sequenom to grow astronomically.
Sequenom's preliminary full-year results support that generally positive assessment, with a call for 59% revenue growth on a huge gain in diagnostic services. But even with these favorable trends, Sequenom has had difficulty making money, spending down much of its cash on hand yet suffering from negative operating cash flow. Moreover, news in January that rival Illumina would buy Sequenom rival Verinata Health pushed Sequenom's stock downward.
In Sequenom's quarterly report, the key will be to decide whether the company will be able to cash in on the profit opportunity from its genetic tests before it runs out of cash and needs to do what could be a highly dilutive offering to raise capital. Sequenom is speculative, but it has a lot of potential if it can improve its operational efficiency.
The best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.
Click here to add Sequenom to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.
The article Sequenom Earnings: An Early Look originally appeared on Fool.com.
Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Illumina. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.