Iris rises on earnings power, analyst upgrade

The Associated Press

Shares of Iris International Inc. climbed Friday morning, a day after the medical test maker reported fourth-quarter earnings and revenue that beat analyst expectations.

THE SPARK: The Chatsworth, Calif., company said Thursday that it earned $2.9 million, or 16 cents per share, in the three months that ended Dec. 31. That compares with earnings of $452,000, or 3 cents per share, in the final quarter of 2010. Adjusted earnings were 15 cents per share.

Revenue rose 13 percent to $33.1 million.

Analysts surveyed by FactSet expected, on average, adjusted earnings of 14 cents per share on $32.8 million in revenue.

The company said sales in its diagnostics division rose 13 percent to $29.2 million in the quarter. It also said its NADiA ProsVue prostate cancer test is now commercially available after receiving regulatory clearance last fall.

THE BIG PICTURE: Iris also reaffirmed its 2012 forecasts on Thursday. It expects earnings to range between 30 cents and 35 cents per share on revenue of between $127 million and $131 million.

THE ANALYSIS: The company's results showed continued operating discipline that included expense control and cash flow generation, Benchmark analyst Raymond Myers said in a research note.

The analyst noted that higher research and development investment this year will produce strong earnings leverage when expenses slow in 2013. He also said growth in revenue from instrument placements recovered in the quarter compared to earlier in the year.

"This improvement and (management's) view of early 2012 orders support our optimism that instrument demand has entered a sustainable recovery after the precipitous decline experienced in 2009," Myers wrote.

He upgraded the company's stock to "Buy" from "Hold" and raised his price target on shares to $12.50 from $8.

SHARE ACTION: Up 4.8 percent, or 53 cents, to $11.63 in late morning trading while the Nasdaq exchange fell slightly. Iris' stock has gained 24 percent this year.