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Analysts Update Estimates for Life Technologies; Bullish on Ion Torrent Business

NEW YORK (GenomeWeb News) – Following Life Technologies' announcement on Tuesday that its fourth-quarter revenues rose 8 percent year over year, a slew of analysts revised estimates for the firm.

The reaction from the analyst community to Life Tech's earnings, and especially the company's Ion Torrent business, was generally positive. Life Tech Chairman and CEO Greg Lucier said that more than 700 of the Ion Torrent Personal Genome Machines were sold in 2011.

He added during a conference call that he expects "substantial growth" in the Ion Torrent franchise in 2012.

In a research note, Vamil Divan, an analyst at Credit Suisse, noted the potential of Ion Torrent, saying he believes that franchise "will allow for [Life Tech] to become the market leader in the high-growth benchtop DNA sequencer market."

Company officials plan to highlight the new Ion Torrent Proton platform at next week's Advances in Genome Biology and Technology Meeting, and Divan said, "We expect the scientific community to be impressed by what they see and think that the meeting should be a positive catalyst for [Life Tech] shares, in spite of competitor data from Illumina and … Oxford Nanopore Technologies that will also be presented at the meeting."

He lowered his earnings per share estimate for full-year 2012 to $3.98 from an earlier estimate of $4.09 but raised his target price on the stock to $57 from $53.

Quintin Lai with R.W. Baird also was bullish about Ion Torrent and said that he believes continued strong uptake of the instruments will offset other headwinds that Life Tech may see during the year, including reductions in qPCR royalties, stimulus-related spending, and sales of the 5500 high-throughput sequencer.

Additionally, Lai said that in 2011 the tsunami in Japan and a reorganization of Life Tech's sales operations in China negatively impacted the company's business. Those will be non-factors in 2012, which could provide an upside to the company's guidance for the year of 2 percent to 4 percent organic revenue growth and non-GAAP EPS of between $3.90 and $4.05.

He lowered his EPS expectation for 2012 to $4.03 from $4.04 but increased the price target on Life Tech's stock to $60 from $55.

Goldman Sachs' Isaac Ro said in a research note that he anticipates all of Life Tech's organic growth will come from Ion Torrent, which he expects to grow sequentially every quarter this year, while the 5500 business is anticipated to shrink by $60 million year over year. He trimmed 2012 revenue estimates to $3.82 billion from $3.83 billion and EPS to $4.03 from $4.06.

Also, Mizuho Securities analyst Peter Lawson cut 2012 revenue estimates to $3.83 billion from $3.89 billion and EPS to $4 from $4.10, while Amit Bhalla at Citigroup raised EPS to $3.98 from $3.97 and increased the price target on the stock to $52 from $44.

Jon Wood of Jefferies trimmed his EPS estimate to $3.95 from $4 to take into account recent currency exchange news, and Oppenheimer's David Ferreiro decreased his EPS estimate to $3.98 from $4.10.

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