Life Tech Bolsters Asia Portfolio

Life Technologies (LIFE) has strengthened its product offering in Asia-Pacific with the launch of its 3500 Dx series genetic analyzers, a capillary electrophoresis (CE) system. Following the launch, the product will be available in Australia, India, New Zealand, Singapore, and Taiwan. The genetic analyzer is targeted at the analysis of human DNA or RNA to detect the presence of a particular disease.

We also note that since the launch of CE 3500 genetic analyzer in the fourth quarter of 2009, Life Technologies has placed 400 instruments and demand remains robust. Subsequent to the launch of the product in the Asian market, we expect revenues to increase further.

The launch is all the more significant since Asia is one of the fastest growing markets for the company. Among the various regions Life Technologies caters to, Asia recorded the highest growth of 19% during the last quarter, followed by America (7%) and Europe (4%). The comparison for Japan, which recorded a 4% decline, becomes difficult since the second quarter of 2009 included revenues from a large police order and H1N1 related sales. Excluding these items, revenues from Japan increased 3%.

Life Technologies’ genetic systems division includes sequencing systems and reagents, including CE and the SOLiD system, as well as reagent kits developed specifically for applied markets, such as forensics, food safety and pharmaceutical quality monitoring. During the second quarter of 2010, this division recorded revenues of $235 million driven by a 7% organic growth.

The genetic systems division, which contributes about 26% to the company’s top line, is likely to strengthen further following Life Technologies’ recent decision to acquire Ion Torrent, a DNA sequencing company, for $375 million in cash and stock.

Our Recommendation

Life Technologies enjoys a strong position in the life sciences market. We believe robust performance from its core business along with new product launches will help drive revenues going forward. Additionally, the company is increasing its focus on China where major investments on healthcare are expected in the near future. However we are also concerned about the situation in the European market where funding might be curtailed due to the economic slowdown.

Based on the long-term potential of the company, we maintain our Neutral rating on the stock, which also corresponds to the Zacks #3 Rank (short-term Hold recommendation).

LIFE TECHNOLOGS (LIFE): Free Stock Analysis Report

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