Luminex Corporation: Why the Pandemic Makes This Biotech Stock Intriguing

Luminex StockInstitutions & 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.

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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.

Fiscal Year Revenues (Millions) Growth
2016 $270.6 N/A
2017 $306.8 13.3%
2018 $315.8 3.0%
2019 $334.6 6.0%
2020 $417.4 24.7%

(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.

Fiscal Year EBITDA (Millions) Growth
2016 $43.4 N/A
2017 $59.8 37.8%
2018 $54.2 -9.3%
2019 $16.5 -69.7%
2020 $72.9 343.3%

(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.

Fiscal Year GAAP Diluted EPS Growth
2016 $0.32 N/A
2017 $0.67 108.6%
2018 $0.41 -38.4%
2019 -$0.09 -120.8%
2020 $0.32 479.7%

(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.

Fiscal Year Free Cash Flow (Millions) Growth
2016 $36.6 N/A
2017 $42.8 17.1%
2018 $29.6 -30.8%
2019 -$2.7 -109.2%
2020 $32.0 1,280%

(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.