Why Shares in Fluidigm Corporation Are Bursting

Fluidigm Corporation shares are plummeting after first quarter results missed expectations.

Todd Campbell
Todd Campbell
May 8, 2015 at 11:29AM
Health Care

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.

Source: Fluidigm Corporation

What: Shares in Fluidigm Corporation (NASDAQ:FLDM) plummeted by more than 25% earlier today after the company reported disappointing first quarter financial results.

So What: Revenue at the genetics research instrument company totaled $26.7 million in the first quarter, which was $4 million shy of analyst expectations.

Earnings didn't fare much better, coming in at a loss of $0.56 per share, or $0.12 lighter than Wall Street was looking for, in part because GAAP accounting product margins slipped to 60% from 65.8% last year.

"Our first quarter did not meet our internal expectations due to several factors, including timing of CyTOF orders and shipments, a shortfall in Biomark system revenues and weak genomics analytical consumable sales. In addition, currency had a more negative impact than we assumed at the beginning of the year," said CEO Gajus Worthingtion about the anemic results.

Now What: Fluidigm is blaming a lot of the shortfall on the timing of orders for its CyTOF single-cell biology product lineup and as a result, the company still expects to put up solid full year sales growth.

However, that growth is now expected to come in below the company's previous estimates.

In addition to the impact of timing, Fluidigm's results were also hit hard by currency headwinds. The company gets 49% of its business from outside of the United States, so currency conversion negatively affected first quarter year-over-year growth by 6%.

As a result, the company has bumped up the low and high end of currencies expected negative drag on sales by 1% to between 4% and 5%, leading to Fluidigm new guidance for sales of between $133 million and $143 million this year, down from prior guidance for between $142 million and $149 million in sales.

Admittedly, the timing of orders can cause lumpy results from quarter to quarter; however, given the uncertainty and the fact that this company is still losing money, I'm unwilling to take the risk of stepping into this sell-off to buy shares.