Citigroup Initiates Buy Rating on Life Technologies (LIFE)

Citigroup is out with a research report this morning, where it initiated a Buy rating on Life Technologies Corp. LIFE; it has a $62.00 price target on the stock. The Citi analysts said, “Formed through the November 2008 merger of Applied Biosystems and Invitrogen, LIFE manufactures instruments & consumables used primarily in life sciences research. Positive view on stock as revs should grow mid-single digits and EPS should grow +12% LT, driven by ongoing merger synergies and new product introductions; with the stock at ~13x Street 2011E EPS of $3.82 (peer median at 16x), we believe risk/reward tradeoff is positive.” They noted a positive investment thesis for the stock, including five key points: (1) “Leading market share in PCR and growth potential in next generation sequencing (NGS) technology (2) Product diversity in terms of offerings in the life sciences but also into faster-growing adjacent markets (forensics/animal health) (3) Potential for additional merger synergies (price, consolidations, and procurement) (4) Robust pipeline of new products in every segment (5) Continued focus on M&A (molecular diagnostics)” They closed by saying, “Our $62 target is based on a 16x P/E on our 2011E EPS of $3.88. We believe LIFE EPS growth will continue to outpace the S&P through 2013, hence a sustainable 1.2x relative P/E which implies a 16x multiple. Also, with LIFE’s LT EPS growth of 12% slightly below its comp group (and comps at 18x P/E), we believe a P/E is slightly below the group is appropriate for LIFE.”