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Market Malaise, Q2 Financials Weigh on Genomic Tool Vendors' Stocks in July

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – As uncertainty about a budget deal being reached in the US Congress weighed down the broader stock market over the past few weeks, the genomic tools sector was hit particularly hard as some industry bellwethers reported quarterly financials that fell short of expectations or provided cautious guidance going forward.

Of the 34 stocks that comprise the GenomeWeb Daily News Index, 28 lost value during the month of July. Overall, the Index was down a little more than 8 percent, its worst performance since dropping 8 percent in May 2010.

Among the top decliners for last month were Affymetrix (-29 percent) and Pressure BioSciences (-25 percent). But also falling in the double digits were Agilent (-18 percent), Illumina (-17 percent) and Life Technologies (-14 percent).

Affymetrix last week reported second-quarter sales of $64.7 million, in line with a range provided earlier in the month when the firm said that it would report a decline in revenues of between 9 percent and 11 percent year over year, sparking a selloff of its shares.

Illumina's shares dropped sharply last week after the firm offered cautious guidance for the remainder of the year, leading several analysts to slash their estimates and price target for the stock. The firm reported 36 percent revenue growth year over year, but CEO Jay Flatley noted uncertainty around US government funding.

Life Technologies also surprised the market by reporting second-quarter results that fell short of analysts' expectations on the top and bottom line. Life Technologies Chairman and CEO Greg Lucier cited "continued budget pressure on academic and government funded research in the US and Europe, the lingering effects of the Japan earthquake on the 5500 launch, and a temporary slowdown in our China business resulting from the evolution of our commercial strategy" as the primary reasons for the difficult quarter.

As with Illumina, several analysts lowered their estimates for Life Tech for the remainder of this year and 2012, while lowering price targets for the firm's stock.

Among the few firms that saw their stock rise for the month, Nanosphere was up around 14 percent and Cepheid gained 9 percent. Rosetta Genomics also rose 12 percent on an adjusted post-reverse stock split basis — but that firm's one-for-four reverse stock split was carried out this month so the firm would meet Nasdaq listing requirements.

Nanosphere's stock bounced back after it tumbled late in June due to the firm receiving a not approvable letter from the US Food and Drug Administration for its Verigene Clopidogrel Metabolism Nucleic Acid Test.

Cepheid, meanwhile, rose sharply after the firm reported that its second-quarter revenues increased 35 percent, beating estimates, as sales of its clinical systems climbed 53 percent year over year.

The broader stock market also had a tough month with the Dow Jones Industrial Average falling 2 percent, the Nasdaq declining 1 percent, and the Nasdaq Biotech Index off nearly 3 percent.


Ed. Note: Danaher and Fluidigm have been added to the GWDN Index, while Beckman Coulter was removed following its acquisition by Danaher. Also, Rosetta Genomics' actual closing price on June 30 was $.29 but has been adjusted according to the reverse split early in the month.

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