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Investment Bank Mizuho Downgrades Qiagen, Alere

NEW YORK (GenomeWeb News) – Investment bank Mizuho today lowered estimates on Qiagen, citing concerns about competition, higher cost assumptions, and an unsettled European market.

Separately, the bank also downgraded diagnostic firm Alere, citing expected cost increases stemming from the firm's molecular diagnostics ambitions.

Analyst Peter Lawson downgraded Qiagen's stock to a Neutral rating from Outperform and lowered his 2012 EPS estimate to $1.02 from $1.10. He also lowered the 12-month price target on the company's stock to $15 from $24.

In a research note, he cited several factors for the downgrades, including increased cost assumptions for Qiagen, driven by higher sales and marketing expenses due to geographical expansion, as well as "a more conservative assumption on the acquired cost structures" from recent purchase Cellestis and pending acquisition Ipsogen.

Lawson further said that despite anticipated upcoming positive developments — such as the full commercial launch of the Decapper system and the submission to the US Food and Drug Administration of the QIAsympony platform, both possibly happening in the fourth quarter of this year, FDA approval of its companion diagnostic for KRAS, and the launch of the QIAensemble Revolution in Europe — he also is worried about increased competition, and noted new products from Roche, Gen-Probe, and privately held firms.

"[W]hile they may not impact market share immediately we are concerned by the headline risk of product approvals and data releases," he said.

Qiagen also has high exposure in Europe, about 35 percent, Lawson estimated, and though end markets in Europe are "holding up well," there is potential risk there that may drag on Qiagen's business.

Lastly, he noted that with more than $900 million in cash, Qiagen may pull another acquisition, which would "bring integration uncertainty and dilution."

In early morning trading, shares of Qiagen on the Nasdaq were up 4 percent to $14.71

Lawson also downgraded Alere to Neutral from Outperform, saying the company's increased penetration into the molecular space and building out of its platform technologies could result in increased R&D spending.

He lowered his 2012 EPS estimate to $2.70 from $2.90, citing an expected increase in sales and marketing expenses, as well as concerns about the health management business "where could see residual margin pressure and potentially top-line pressure."

Shares of Alere on the New York Stock Exchange were up a fraction of 1 percent to $21.35 in early morning trading.

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