Essay About Fy-07 And Mass Spectrometry

Applera Corp – Applied Biosystems
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Reason for report:
Initiation
August 7, 2007
Outperform
Applera Corp – Applied Biosystems
Top Life Science Firms Shares Should Benefit As
Fundamental Clarity Improves
Key Stats: (NYSE:ABI)
• Were initiating research coverage of top-tier life science tools
franchise Applied Biosystems (ABI) with an Outperform rating.
Were impressed with the growth profile and ABIs new products in the
Real-Time PCR area, we think its new SOLiD next-gen DNA sequencer will
settle investor nerves by reaching market on time in October, and ABIs
mass spectrometry (MS) offerings are positioned in front of what we think
of as the best opportunity in the MS industry.
• TaqMan Array cards proving a popular and useful product line
extension; single-SNP assays still growing well. We think ABIs largest
business area, Real-Time PCR/Applied Genomics, can grow at a CAGR of
10% over FY-07 to FY-10 due to new array cards of gene-based TaqMan
expression assays and its popular single-SNP genotyping assays.
• In DNA sequencing, a next-gen platform looks on track to us. We
expect ABIs SOLiD next-generation DNA sequencing system to see a
successful launch in the fourth calendar quarter of 2007, and put ABIs DNA
sequencing business area (its second-largest) on a meaningful growth track
in FY-09. Beased on product specifications but not direct use, MEDACorp
consultants with whom weve spoken foresee good lab researcher interest
in SOLiD.
• ABIs triple quadrupole mass spectrometry franchise is
well-positioned for pharma and CRO spending in drug
development. In mass spectrometry, we expect continued gains in ABIs
triple quad MS franchise as pharmas and CROs advance molecules into
clinical testing; the new FlashQuant should help ABI penetrate earlier-stage
research, where it has not been as strong.
• We expect $39 – $40 in a year on ABI shares. ABI shares have
underperformed the market and its life science tools peer group
significantly