ANALYST PREDICTS ABI TURNAROUNDApplied Biosystems Inc. of Foster City, Calif., is about to embarkon "a significant turnaround" in profits, said Jonathan W.Osgood, an analyst with Alex. Brown & Sons Inc.'s office inBoston. Osgood rates ABI stock (NASDAQ:ABIO) a "buy."
ABI's second-quarter 1991 profits were 3 cents a share on netsales of $42.2 million. Although the company's profit slippedfrom 16 cents a share a year ago, Osgood had forecasted onlybreak-even results.
Osgood noted that orders rose faster than sales. This wasespecially true in Japan, which forms Applied Biosystems'second-largest market. Sales of reagents and chemicals grew 27percent, but instrument sales fell 10 percent and trendedtoward flat. Second-quarter production and inventoryreductions of $3.3 million hurt gross profit margins.Nonetheless, savings from this and plant consolidations shouldfatten margins for the year.
Based on second-quarter results, sales growth and improvinggross margins, Osgood now forecasts a 21-cent-a-share loss forthe year ending June 30. That is better than his prior forecastof a 25-cent loss. Osgood's estimates include a non-recurringcharge of 32 cents per share in the first quarter. He is stickingto a 45-cent profit forecast for fiscal 1992.
ABI, which has traded in a 52-range of $6.50 to $15.75, closedWednesday at $15 a share, up 13 cents. -- Ray Potter
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