April 17, 2008 / 12:53 PM / 12 years ago

UPDATE 2-Meridian Bioscience Q2 results miss market estimates

(Adds analyst’s comment, stock movement)

By Esha Dey

BANGALORE, April 17 (Reuters) - Meridian Bioscience Inc (VIVO.O), a medical diagnostic kit maker, posted a second-quarter profit that narrowly missed market expectations on weaker sales at its life science unit, sending its shares down by as much as 25 percent.

“The market reaction is way overdone,” Soleil Securities analyst Elliott Schlang said. The company, which backed its fiscal 2008 outlook, posted quarterly earnings of $7.3 million, or 18 cents a share, compared with $5.9 million, or 15 cents a share, a year ago. Net sales rose 13 percent to $36.2 million, but was dragged by a 9 percent fall in sales from the life science unit. Analysts on average were expecting earnings of 19 cents a share, before special items, on revenue of $36.6 million, according to Reuters Estimates.

The life science unit was hurt by lower demand from a major viral protein customer and a delay in shipment to a biopharma partner, CEO John Kraeutler said in a statement.

Weak life science sales, coupled with a product mix that included low-margin products, reduced gross margins for the period, Kraeutler added.

Schlang, who has a “hold” rating on the stock, said the delay in shipment in the higher-margin life science business made revenue more dependent on the lower-margin flu-test business.

The Cincinnati-based company still expects fiscal 2008 earnings of 72 cents to 75 cents a share on revenue of $140 million to $142 million. It also expects margins to recover in the third and fourth quarters.

Analysts were expecting earnings of 75 cents a share, excluding exceptional items, on revenue of $141.7 million.

Shares of the company were down more than 16 percent at $28.22 in midday trade on Nasdaq. They touched a low of $25.20 earlier in the session. (Editing by Anil D’Silva, Himani Sarkar)

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