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.
| 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.
