>>ILMN nearly 20%.<<
On huge price cut on competing AFFX product:
SANTA CLARA, Calif. (AP) -- Shares of genetic analysis technology company Affymetrix Inc. slipped Wednesday following the company's move to reduce prices of a product used to test drug candidates.
The company said late Tuesday it is immediately cutting prices on its 500K SNP (single nucleotide polymorphisms) system to $250 and will offer the two-chip system as a single array by the end of the year. The company did not detail the product's original price, but UBS Investment Research analyst Derik De Bruin estimates it at around $750.
The company's stock slid $1.07, or 4.6 percent, to $22.28 on the Nasdaq in morning trading. It hit a new 52-week low earlier in the session, sliding to $22.02 before regaining some ground.
Analysts attribute the price-cutting move to growing competition from rival Illumina Inc. Illumina recently launched chip, the HumanHap550, which contains over 550,000 SNP on one chip, making it more powerful than Affymetrix's product, which contains 500,000.
Affymetrix said Tuesday it plans on releasing a system with 1 million SNP by the first quarter of 2007, with an expected price of $500.
While several analysts held their ratings for Affymetrix, some price targets were lowered on concerns over sales volume.
"We interpret Affymetrix's announcements as a sign that its genotyping business likely will not rebound until 2007," wrote Baird analyst Quintin J. Lai in a research report Wednesday.
Lai maintained a "Neutral" rating but cut his price target to $25 from $30, saying the price cut in its genotyping system is a "negative reflection on its current competitiveness" against Illumina's product.
UBS Investment Research analyst Derik De Bruin maintained his "Reduce" rating, but shaved his price target to $22 from $23, citing competition.
"Affymetrix has dominated the microarray arena, but execution problems have undercut investor confidence, calling into question (its) competitive position in the market outlook," he wrote in a report to investors.
While the price cutting move may help the company maintain its market share in the near-term, De Bruin said growth and margins could be constrained if it doesn't ramp up volumes.
Shares of Illumina surged $6.86, or 23.8 percent, to $35.71 on the Nasdaq in morning trading, eclipsing their previous 52-week high of $32.60 set July 6.<<
Cheers, Tuck (with another high five to George! If that's in his charity portfolio, look out.) |