Luminex Corporation: Why the Pandemic Makes This Biotech Stock Intriguing

Institutions & Insiders Loading Up on Luminex Stock

The COVID-19 pandemic was a shock to the world, but for the biotech industry, it brought attention to many overlooked companies.

In the biotech research and development space, a compelling small-cap stock with a strong risk/reward situation is Luminex Corporation (NASDAQ:LMNX). The company helps biomedical labs, pharmaceutical companies, and biotech companies in the discovery phase.

Powered by the pandemic, LMNX stock more than doubled from its March 2020 low to a record $41.69 in August 2020.

Since that high, Luminex stock has pulled back by about 24%, providing investors with a more reasonable entry point if they missed the initial jump.

The LMNX stock chart shows rallies off lows in March and December 2020 before displaying a golden cross pattern in March 2021. There’s resistance at $34.00. A break could drive a move toward $40.00.

Chart courtesy of StockCharts.com

Strong Revenue & Profitability Supports Bull Case for LMNX Stock 

A look at Luminex Corporation’s five-year revenue picture shows sequential growth in each year to a record $417.4 million in 2020.

The compound annual growth rate (CAGR), which was 11.4% during this time frame, is expected to ramp higher.

(Source: “Luminex Corp.” MarketWatch, last accessed April 5, 2021.)

The revenue estimates are rising for Luminex. The company is expected to report revenue growth of 15% to $480.1 million for this year and revenue growth of eight percent to $518.7 million for 2022. (Source: “Luminex Corporation (LMNX),” Yahoo! Finance, last accessed April 5, 2021.)

Luminex delivered five consecutive years of positive earnings before interest, taxes, depreciation, and amortization (EBITDA), including a record $72.9 million in 2020, up 343.3% from 2019.

(Source: MarketWatch, op. cit.)

As far as profitability goes, Luminex Corporation reported positive generally accepted accounting principles (GAAP) diluted earnings per share (EPS) in four of the last five years.

(Source: MarketWatch, op. cit.)

While Luminex stock was pressured by an earnings shortfall in 2020, the company’s outlook is bullish. Analysts estimate that Luminex will significantly drive its profits to $0.88 per diluted share in 2021, followed by $1.09 per diluted share in 2022. (Source: Yahoo! Finance, op. cit.)

Luminex Corporation has managed to produce positive free cash flow in four of the last five years.

(Source: MarketWatch, op. cit.)

The company’s balance sheet shows strong working capital, debt of $222.4 million, and cash of $309.4 at the end of December 2020. (Source: Yahoo! Finance, op. cit.)

Analyst Take:

Luminex Corporation has attracted institutional and insider buying. About 291 institutions control a 91% interest in LMNX stock, and insiders added a net 174,063 shares of Luminex stock over the last six months. (Source: Yahoo! Finance, op. cit.)

So while the pandemic has been brutal, it has attracted investors to biotech stocks that were previously not on their radar.

The COVID-19 pandemic is generational, but there will be other viruses and diseases that will require the kinds of technologies Luminex provides.