Bio-Rad: Profitable Diagnosis

05/19/2015 7:00 am EST


Leo Fasciocco

Investment Columnist and Publisher, Ticker Tape Digest

Our latest featured breakout stock makes products and systems for the life science research, healthcare, and analytical chemistry markets, explains Leo Fasciocco, editor of Ticker Tape Digest.

Bio-Rad Labs (BIO) makes products used to separate complex chemical and biological materials and to identify, analyze, and purify their components.

The life science segment offers electrophoresis, image analysis, molecular detection, chromatography, gene transfer, sample preparation, and amplification products and services.

The clinical diagnostics segment provides control, autoimmune, diabetes, and blood virus testing products.

The stock advanced from $57 in 2006 to a peak of $115 in 2007, the top in the prior bull market. It then fell back to $51 by early 2009. Since then it has almost tripled.   

Technically, the stock has just broken out from a five-week flat base. The move carries the stock to a new all-time high. It came public back in 2002 at $48.30.

BIO came in with first quarter earnings of 61 cents a share, up from 23 cents a year ago and topping the consensus estimate of 33 cents a share. The wide margin on the beat is very bullish and could propel the stock higher.

This year, analysts have been forecasting a modest 3% rise in net to $3.15 a share from $3.05 a year ago.

However, with the big beat in the first quarter, that estimate probably will be bumped up. We could see $3.50. Going out to 2016, analysts look for a 19% gain in profits.

We are targeting BIO for a move to $170 off this breakout. A protective stop can be placed near $137. BIO is appropriate for aggressive investors, since earnings tend to be volatile versus Street expectations.

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