For the past few quarters, Life Technologies (LIFE) has been focusing on the emerging markets and the Asia Pacific region. To further strengthen its foothold in the Asian market, the company recently opened a regional distribution hub in Singapore. Through this, Life Technologies will be able to target India, China, Taiwan, Hong Kong, Korea, South East Asia, Australia and New Zealand. Asia Pacific, one of the key focus areas of the company, recorded more than 15% growth in sales in 2010.
Life Technologies’ increasing focus on emerging markets has accounted for approximately 10% of the total revenue in 2010. While the company had derived $188 million in 2007 from this region, it is expected to increase to $1.6 billion in 2015, representing a CAGR of 30%. In order to drive growth in emerging markets, the company adopts strategies like investing in infrastructure, increasing sales force and maximizing eCommerce capabilities.
To achieve these objectives, Life Technologies has expanded its distribution network in Singapore and China as well as India, where it recently acquired LabIndia–a long-time distributor of Applied Biosystems’ products. These strategies coupled with continuous investments in Asia -Pacific and Latin America should enable the company to tap these fast-growing regions.
Recommendation
Life Technologies enjoys a strong position in the life sciences market and we believe robust performance from its core business along with 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. Additionally, the company is increasing its focus on emerging markets, which bode well for long-term growth.
We are also impressed by Life Technologies’ acquisition of Ion Torrent, which is expected to contribute significantly to the top line going ahead. While we are pleased with the company’s strong performance, it could face challenges such as increased competition from players such as Thermo Fisher Scientific (TMO), Illumina (ILMN), unfavorable currency movement and declining demand due to the economic slowdown.
We are currently ‘Neutral’ on the stock, which also corresponds to the Zacks #3 Rank (hold) in the short term.
ILLUMINA INC (ILMN): Free Stock Analysis Report
LIFE TECHNOLOGS (LIFE): Free Stock Analysis Report
THERMO FISHER (TMO): Free Stock Analysis Report
Zacks Investment Research
