Gen-Probe Inc.GPRO

Morningstar Rating

Stock Research and Analysis

by Lauren Migliore

Gen-Probe pioneered the scientific and commercial development of nucleic acid testing, or NAT, which enables the detection of microorganisms that are difficult or time-consuming to identify with traditional laboratory methods. We think Gen-Probe is Read more

Bulls Say

Gen-Probe's assays are utilized to screen over 80% of the donated blood supply in the United States, helping establish brand recognition and providing the firm with opportunities to cross-sell its products.

The company is well-positioned to capitalize on a dramatic upswing in NAT-based cancer diagnostic products as additional biomarkers are discovered and clinically validated; we expect oncology tests to contribute over 10% of Gen-Probe's revenue by 2013.

The Panther Instrument System should give the firm an entrance into the multimillion-dollar market of low- to mid-volume laboratories--especially in high-growth markets abroad--that are not currently served by Tigris.

Gen-Probe's APTIMA 2 Combo assay for STD testing claims a premium price to its previous offering, PACE. The firm's profitability in its clinical diagnostic segment should improve as customers upgrade to APTIMA over time. Read more

Bears Say

The firm's blood screening segment has faltered recently as currency head winds and supply chain issues weigh on revenue growth. If sales of this high-margin business continue to decline, Gen-Probe's profitability could suffer.

Gen-Probe faces competition from larger companies with greater resources, such as Roche and Abbott ABT. The firm's performance relies on its ability to continually develop cutting-edge products, leaving the firm and shareholders vulnerable should it fall behind.

3M discontinued both of its development programs with Gen-Probe, casting doubt on the firm's ability to successfully launch a portfolio of products outside its core segments.

If blood screening markets trend from pooled testing of a large number of samples to smaller pool sizes, Gen-Probe's gross margin may suffer due to its cost-sharing arrangement with Novartis. Read more

Strategy

Gen-Probe employs its NAT technology to create diagnostic tests that produce better and faster results than traditional cultures and immunoassays. Gen-Probe seeks to gain market share through new product Read more

Management

We assign the company good marks for stewardship based on its record of generating shareholder value and topnotch board of directors. Carl Hull took over the reigns from former CEO Henry Nordhoff in May 2009 after serving as the firm's chief operating Read more

Profile

Gen-Probe develops, manufactures, and markets nucleic acid assays for clinical diagnosis, blood screening, and industrial production. The firm markets its clinical diagnostic Read more

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