Life Science Equipment makers face shaky economy, sales environment in 2009
Monday, January 26, 2009 at 10:46PM Makers of drug development research and medical equipment could face a slowdown in 2009 according to several analysts, as the economy remains weak and clients cut back on spending.
A broad range of companies that service researchers and medical care providers will report quarterly financial results in the coming weeks. But the main concern for investors, said Thomas Weisel Partners analyst Peter Lawson, will be the companies' outlooks moving forward.
"Visibility has been severely impaired as the global slowdown continues and financial markets remain volatile," he said, in a note to investors.
Sunnyvale, Calif.-based Cepheid, which makes molecular diagnostic products, has already said it expects to report fourth-quarter results that fall short of analysts' estimates and expects a weak 2009. Meanwhile, Palo Alto, Calif.-based Varian Medical Systems Inc., which makes radiation therapy systems, already reported better-than-expected sales for its fiscal first quarter, though the stock fluctuated earlier in January on concerns of an industrywide slowdown.
Capital spending remains the primary concern, Lawson said, with companies geared toward the industrial markets at risk, including Varian and Sunnyvale, Calif.-based Dionex, which makes analytical instruments for chemicals. On that same note, though, Dionex could also come out ahead, as safety testing remains a key industry. Waltham, Mass.-based PerkinElmer Inc., which provides technology and services for the drug development industry, could also see a benefit from the continued spotlight on safety testing.
"Following comments from individual management teams at recent investor conferences, we expect the default position to be the issuance of muted 2009 guidance, as companies take a cautious look at the current economy, health care spending trends, and capital spending in both lab and hospital environments," said Leerink Swann & Co. analyst Bruce Cranna, in a note to investors.
He and several others in the industry cite a mix of a weak economy, cuts in spending and a stronger U.S. dollar as factors putting pressure on life sciences companies.
Reader Comments