Why GenMark Diagnostics Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of GenMark Diagnostics (NASDAQ: GNMK  ) were returning positive results today, jumping as much as 13% after a strong earnings report.

So what: The development-stage molecular diagnostics company beat estimates on top and bottom lines with a revenue of $9.4 million, a 364% increase from the year before, and an EPS loss of $0.15 was better than the $0.21 loss analysts expected. CEO Hany Massarany noted that a strong flu season and the continued expansion of the company's installed base contributed to the better-than-expected quarter. Gross margin also dramatically improved to 50% from 20% in the same quarter a year ago.

Now what: Guidance for 2013 also beat estimates, as GenMark expects revenue to grow 70% to $35 million in the year. Analysts had expected just $30.6 million. The company also predicts its installed base of analyzers to grow by about 50%, or an additional 150 machines. Still, GenMark seems at least a few years from profitability, and it's hard to justify its current $400 million market cap. Shares have more than tripled in the past year, and it seems like it could be time to cool off.

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