Qiagen Outpaces EPS Est, Revenues Lag - Analyst Blog

Qiagen (QGEN) reported an EPS of 15 cents for the fourth quarter of fiscal 2010 compared to 18 cents in the year-ago period. However, after making some adjustments the EPS came in at 26 cents, beating the Zacks Consensus Estimate by a penny. Adjusted EPS for the prior-year quarter was 24 cents. For the full year, the company reported adjusted EPS of 93 cents, surpassing the Zacks Consensus Estimate of 89 cents and unchanged from the year-ago quarter's adjusted EPS.

Net sales during the quarter were $286 million, down 1% from the prior-year quarter's $289.1 million and remaining unchanged at constant exchange rates (CER). However, sales missed the Zacks Consensus Estimate of $295 million. Excluding swine-flu related products, revenue increased 7% at CER. For fiscal 2010, Qiagen reported an 8% growth in sales to $1,087.4 million, missing the Zacks Consensus Estimate of $1,093 million.

While revenues related to consumables (accounting for 85% of net sales in the quarter) increased 12% annually at CER, instrumentation revenues (accounting for the rest) increased by the same magnitude. Among the different regions, Americas, Europe and Asia/Japan all recorded robust growth during the quarter.

Qiagen primarily derives revenues from molecular diagnostics, applied testing, pharma and academia, which represented 48%, 6%, 21% and 25% of total sales during the quarter. Molecular diagnostics sales recorded a robust growth of 7% at CER driven by demand from the profiling assays portfolio. However, the company has witnessed a decline in HPV (human papillomavirus) test screening and genotyping solution sales as increased penetration was offset by decline in doctor visits.

Sales derived from applied testing increased 5% at CER during the quarter, driven by double-digit sales growth in consumables. Moreover, the company's portfolio expansion initiatives to address new European standards in forensic testing and food safety also contributed to strong growth during the year. Sales from Pharma increased 11% at CER and Academia recorded 5% growth. But the company has witnessed softness in drug discovery due to consolidation in the pharmaceutical industry.

Qiagen began the European launch of QIAsymphony RGQ, which is a next-generation automated modular testing platform, in late 2010. A wide range of molecular tests are offered in this system which includes virology assays such as HIV, HCV and HPV as well as tests related to organ transplantation. In January 2011, the company acquired a strategic stake in Alacris Theranostics GmbH, a German company which uses proprietary technology to develop individualized therapy based on a patient's genomic profile.

Outlook

For 2011, Qiagen expects to report a 5-7% growth in net sales at CER. Moreover, adjusted EPS is expected to increase 7-13% at CER. While results are expected to be soft in the first quarter of 2011, it should increase gradually later in the year driven by higher sales volume and new product launches.