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Investment Bank Initiates Coverage of Caliper with Outperform Rating

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Investment bank Wedbush Securities has initiated coverage of Caliper Life Sciences with an 'Outperform' rating and a 12-month price target of $9.

Wedbush analyst Zarak Kurshid cited Caliper's products for the sequencing and diagnostic markets as key drivers for the firm. He also said that recent divestitures provide a "cleaner story" as the firm moves toward sustainable profitability.

"We believe growth prospects in the company's base business are stronger than the Street realizes," wrote Kurshid. "In our opinion, new product traction in next-generation sequencing sample preparation as well as greater adoption of the company's products in molecular diagnostics can drive upside to consensus estimates, increase investor awareness, and result in strong share price appreciation in 2011."

Wedbush estimates that Caliper's microfluidics business, which includes its flagship LabChip platform, brought in revenues of around $32 million in 2010, representing growth of roughly 12 percent year over year.

Early in 2010, Caliper launched its LabChip XT system, an automated nucleic acid size selection and collection instrument used for next-gen sequencing sample preparation. The firm inked a co-marketing deal with Illumina in October, under which the firms agreed to co-market the LabChip XT and LabChip GX quality control platform for use with Illumina's Genome Analyzer and HiSeq2000 systems.

Caliper also announced an alliance last week with NuGen Technologies to co-market their sample preparation products for next-generation sequencing applications.

For the diagnostics market, Caliper recently introduced the LabChip DX, a scaled-down version of the GX that is targeted at diagnostic customers and expanding the firm's presence in clinical labs.

The product introductions in 2010 and early 2011 come as the firm finished off a program to divest some non-core assets.

Caliper also bolstered its imaging products business through the $20 million acquisition in December of Cambridge Research & Instrumentation. The deal is expected to expand Caliper's business into the issue imaging and digital pathology clinical research markets.

Wedbush expects Caliper to report revenue growth of roughly 17 percent in 2011 and 12 percent in 2012.

In early Wednesday afternoon trade on the Nasdaq, Caliper's shares were down nearly 3 percent at $6.40.

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