Dionex Corporation (NASDAQ: DNEX) manufactures
chromatography systems for chemical analysis. The company's devices are used to identify contaminants and impurities in a range of materials from foods and beverages to industrial chemicals. They are also used by life science investigators to separate and identify biological molecules such as amino acids, carbohydrates and proteins. The Dionex sales force is active throughout North America, Europe and Asia. Agilent Technologies (NYSE: A) is a major competitor.
The firm pleased the Street last week, when it reported Q2 EPS of 77 cents and revenues of $98 million. Those figures topped analyst expectations of 72 cents and $91.4 million. The CEO cited solid demand in the chemical/petrochemical and food/beverage markets for the strong quarter. U.S. sales were said to have shown marked improvement. Management also guided Q3 EPS to 66-70 cents (68 cent consensus), Q3 revenues to $92-$96 million ($90.52M consensus), FY08 EPS to $2.62-$2.69 ($2.61 consensus) and FY08 revenues to $363-$370 million ($358.17M consensus). Wedbush Morgan subsequently upgraded the stock from "hold" to "buy".
DNEX shares
jumped on the news and are now consolidating the gain in a bullish "flag" pattern. Equities frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Altogether, brokers recommend the issue with one "buy" and two "holds". Analysts see an 18% average annual growth rate, through the next five years. The DNEX Operating Margin (21.58%), Net Profit Margin (13.76%), Return on Assets (17.49%), Return on Investment (23.69%) and Return on Equity (25.74%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 95% of the outstanding shares. The stock is one of those used to calculate the S&P 600 SmallCap Index. Over the past fifty-two weeks, it has traded between $60.51 and $88.39. A stop-loss of $67.25 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in the stocks mentioned above.
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Reader Comments (Page 1 of 1)
2-08-2008 @ 7:34AM
Ken Green said...
Dionex 18% average annual growth rate, through the next five years is outstanding prediction. Waters may do the same and leave Agilent trailing in the BAM sector.