Quote Originally Posted by wallstreetcappers:
SQNM-
At least it is forming an uptrend. I dont like seeing a 1 for 3 last year, and I think they STILL have too many shares outstanding at 40 plus million.
Margins are not good, they sell at big ratios to sales and book. Good for you that recently they filled the tank on cash (I imagine by selling stock) so dilution wont hit you in the near term.
In order for them to start making money, they will have to increase sales by about 3 times what they currently are. (go to the income statement and equate their gross margin which is about 58%, then find out operating expenses and you will see break even).
So if you think they will triple sales in the next few years then the risk is worth the reward.
This was a pretty good article from Seeking Alpha on why current revs and margins are not really reflective of true value here. I'd also add that the recent news shows that their products are going to have uses for cancer detection and profiling.
Steve B. submits: Sequenom (NasdaqGM:
SQNM -
News)
is a genetic lab company. We found it on an insider buying list when
the CFO and other execs were buying a ton of stock in the open market.
At first glance SQNM may look expensive. They have the best in breed
gene sequencing system called MassArray that is growing 30% or so a
year.
Recurring
revenue (total 07 REV is about 42mil) comes from the service of these
systems and disposable units used in the gene work. The Market Cap of
the company is about 200 mil, so the question was why are the execs
buying so much stock? SQNM is developing a series of non-invasive
prenatal diagnostics for various birth defects. These tests are
currently administered in the 3rd trimester through a fluid draw with
an amnio needle. The SQNM test uses nucleic acid in fetal DNA found in
maternal blood from a blood draw instead of the amnio fluid. What makes
this significant is the amnio test has a 1% to 2% accidental abortion
rate, is performed in the 3rd trimester, and has not proved to be 100%
accurate.
The SQNM test in trials has proved to be 100% accurate
in the 2nd trimester for detecting Down Syndrome and RhD (a condition
where the mothers blood and the fetal blood do not match up) and has no
risk of an accidental abortion. SQNM’s test is more accurate, earlier,
and has no risk of accidental abortion. The RhD test should be ready
for approval in the next few weeks and the Downs test by the back half
of 08. During the last conference call the time line for the test was
moved up significantly.
The market for the RhD test currently is
small, 30mil to 50mil tests per year (as stated in the last conference
call). Recently a panel of prenatal doctors recommended that all
pregnant women be tested for 4 test (one being Downs) by the start of
08; now only women over 35 have to be tested. The market for the downs
test, according to the company, is over 1 billion for 2007 and will
grow into 2008. SQNM also announced in the last CC that they are
constantly finding new applications for their testing system that could
add even more potential market share.
If everything is approved,
as it is much easier to get a diagnostic test approved then a drug, the
downs test will become the gold standard for all pregnant women in the
US. Overnight a billion dollars worth of amnio sales are going to go
away from the large medical supply companies. SQNM will not be around
this time next year if they are going to get approval. A med company
like this should get at least 2x revs if not 3x so if you do the math,
1B in Downs test sales at 2x revenues makes SQNM $50 (1B x 2 / 40mil
shares).
The latest Conference Call is about the most bullish CC
I have heard in a long time. The company beat on revenues and bottom
line estimates. The company would also be profitable if not for the
diagnostic research.? They raised guidance and moved up all the timelines for the prenatal test.
. He doesn't even know anything about GIGM. Said " I would rather own cisco instead of GIGM." WTF? Totaly different kind of companies.
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