Health and Healthcare
Affymetrix Year-Lows On Debt..No Good Deed Goes Unpunished (AFFX)
Published:
Last Updated:
Affymetrix (NASDAQ:AFFX) was a bit of a puzzling stock today when we saw it had hit a 52-week low after a proposed $250 million convertible note offering. After the near-10% haircut, this has a $1.5 Billion market cap, and its triple-digit P/E ratio is a bit misleading when you you consider the $0.30 2007 estimate and the $0.51 estimate for 2008. Revenue estimates for 2007 and 2008 ar $371.7 million and $401.2 million, respectively.
The company isn’t without troubles, because it will lose some key Roche revenues in 2008 and it has increased its patent lawsuits against Illumina.
Its recently established diagnostics business is the hopeful here, but its partners need FDA marketing approval before that becomes a huge win.
As of September 30, its current assets were $400 million, and total assets outside of Goodwill, deferrals, and ‘other’ are in the vicinty of $600 million. Its current liabilities are $79+ million and other longer-term debt (including another convertible note) total just under $137 million more; so total liabilities are about $216 million.
The 30-year $250 million in notes may even be used to retire a portion of its previously issued notes. The terms and conditions will be negotiated between Affymetrix and J.P.Morgan, its underwriter. The "use of proceeds" from this offering is for general corporate purposes. This near-10% drop to $21.72 is a loss of of one-third its value from highs as the 52-week trading range $21.58 to $31.95. Defending triple digit P/E stocks on announcements isn’t what 24/7 Wall St.normally does. But in this case the financing pact may be deemed cheap.
We’ll evaluate the full spectrum of analyst comments tonight and tomorrow and after we get word of the terms and conditions of the financing, but this sell-off seems excessive for a stock that traded up to $28 last month before its quarterly report.
Jon C. Ogg
November 13, 2007
Jon Ogg produces the 24/7 Wall St. Special Situation Investing Newsletter; he does not own securities in the companies he covers.
Travel Cards Are Getting Too Good To Ignore (sponsored)
Credit card companies are pulling out all the stops, with the issuers are offering insane travel rewards and perks.
We’re talking huge sign-up bonuses, points on every purchase, and benefits like lounge access, travel credits, and free hotel nights. For travelers, these rewards can add up to thousands of dollars in flights, upgrades, and luxury experiences every year.
It’s like getting paid to travel — and it’s available to qualified borrowers who know where to look.
We’ve rounded up some of the best travel credit cards on the market. Click here to see the list. Don’t miss these offers — they won’t be this good forever.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.