It's usually great for a company like biochip maker Affymetrix
Affymetrix lowered its 2008 guidance last week, and yesterday it gave a little more clarity as to why the performance was poor this quarter. Excluding a timing issue that pushed $3 million of contract research into the second quarter, most of the remaining miss came from pharmaceutical companies doing less research using its gene expression chips. Illumina
The problem is that "pharmaceutical companies are doing less target identification," and that's the type of research that uses the expression chips. It's possible that some of the sales will come back after pharmaceutical companies like Wyeth
Affymetrix's newer genotyping chips, on the other hand, saw strong 24% year-over-year growth in the quarter. Affymetrix and Illumina don't see sales of these chips slowing down anytime soon; in fact, they'll likely grow faster as the companies expand into the clinical setting.
That's one area where Affymetrix is definitely ahead of Illumina. Laboratory Corp. of America
Affymetrix is guiding for 8%-13% growth in revenue this year, excluding a one-time gain from a patent settlement. Year-over-year growth could get worse before it gets better, but investors who can hold on through Affymetrix's adjustment to more clinical revenue might be getting the company for a steal at these prices.
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