Life Technologies Corporation (LIFE) recently completed the sale of its mass spectrometry business to Danaher Corporation (DHR) for $450 million in cash, subject to a conventional working capital adjustment. Danaher also acquired Life’s joint venture partner in the mass spectrometry business, MDS Analytical Technologies, a division of MDS Inc. (MDZ).
We view Life’s decision to divest its Mass Spectrometry business as a smart strategic move. This decision should allow the company to focus on the high growth molecular and genomics markets. Moreover, the company will be able to utilize a part of the sale proceeds for the repayment of its significant debt.
Life recently reported strong results for the fourth quarter of 2009. The company reported fourth quarter earnings of 80 cents per share, well above the Zacks Consensus Estimate of 72 cents. For the full year, the company reported earnings of $3.04, beating the Zacks Consensus Estimate of $2.96. Full year results were better than the year-ago earnings of $2.85.
Strong growth in Europe, Asia-Pacific, the Americas and Japan helped fourth quarter revenues increase 14% to $874 million. Moreover, all the revenue segments at Life recorded an increase in sales during the fourth quarter. Full year revenues increased 5% to $3.3 billion.
Following the release of strong fourth-quarter and fiscal 2009 results, the company provided guidance for fiscal 2010. Life expects earnings per share in the range of $3.30 – $3.50 on mid-to-high-single digit organic revenue growth.
The current Zacks Consensus Estimate for fiscal 2010 is $3.40, at the mid-point of the guidance provided by the company. Estimates for fiscal 2010 have been on the rise with 9 of the 13 analysts covering the stock raising their numbers over the last 30 days. Only 2 analysts revised their estimates downwards over the same period. Meanwhile, 4 analysts have raised their estimates for fiscal 2010 in the last 7 days with no downward revisions during the same period.
Life enjoys a strong position in the life sciences market and we believe robust performance of the core business and new product launches will help drive revenues going forward. Meanwhile, lower expenses and cost cutting along with increased revenues should help drive the bottom-line.
For fiscal 2011, while 4 of the 13 analysts covering the stock have raised their estimates over the past 30 days, 3 have moved in the opposite direction over the same time period. The current Zacks Consensus Estimate for 2011 is $3.73. While we are pleased with Life’s strong performance, the company could face challenges such as integration risks, increased competition, and declining demand due to the economic slowdown. We currently have a Neutral recommendation on the stock.
Read the full analyst report on “LIFE”
Read the full analyst report on “DHR”
Read the full analyst report on “MDZ”
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