Benchmark Reports Q4 EPS And 2011 Guidance Well Below Consensus for IRIS International

According to Benchmark, IRIS International IRIS had Q4 EPS and 2011 Guidance well below consensus. Benchmark reported that revenue of $29.3 million in 4Q10 slightly exceeded the consensus $28.8 million forecast but EPS of $0.03 missed the $0.06 consensus. “Weakness was attributed to numerous one-time and recurring events, including a $789,000 R&D tax credit, without which Q4 EPS would have been $0.00. Operating earnings were $51,000 in Q4 and free cash flow was negative $4.9 million (-$0.27/share). Cash declined $5.6 million to $25.5 million ($1.43/share). Cash declined $11.5 million in 2H10. Management guided to a “few cents loss” in 1Q but anticipates earning $0.19-$0.21 EPS for the full year, including the Arista laboratory venture consuming $0.20-$0.25 in EPS. We do not share management's optimism and are alarmed by the deterioration in margins, cash flow and the Company's cash balance. We are reducing our price target to $5.00 from $6.00.” IRIS International closed yesterday at $10.04.