Bull Of The Day: Affymetrix (AFFX)

Some stocks out there are just “no brainers.” These are my favorites. They’re the stocks that have a chart that goes from the bottom left to the top right of the screen. They’re the ones with earnings estimates that are constantly being revised to the upside. They’re the companies that continue to beat consensus quarter in and quarter out. Today I’ve found one of these stocks to be our Bull of the Day.

Affymetrix (AFFX - Analyst Report)invented the world’s first high-density microarray and began selling the first commercial microarray. Since then, Affymetrix GeneChip technology has become the industry standard in molecular biology research. Their technology is used by the world’s top pharmaceutical, diagnostic and biotechnology companies as well as leading academic, government, and not-for-profit research institutes.

AFFX is a Zacks Rank #1 (Strong Buy) and is coming off a strong earnings report. Total revenue for FY2014 came in at $349 million, up from $330.4 million in 2013. Total revenue grew by 8.9% after adjusting for a one-time license payment of$5.3 million in 2013 and the sale of its Anatrace business. Total GAAP gross margin was 59% as compared to 55% in 2013. Growing margins and boosts in revenue helped AFFX beat consensus by 2 cents per share for Q4 at 9 cents. Over the last four quarter, AFFX has beat by an average of 3 cents.

This prompted analysts to jack up their earnings estimates for the current year and next year. Four analysts increased estimates for the current year while two raised their numbers for next year. The bullish attitude has helped push the Zacks Consensus Estimate up from 27 cents to 30 cents for the current year and 29 cents up to 35 cents for next year.
 

The stock has been rallying since hitting a bottom at $7 during the lows of October 2014. In late October AFFX popped above the 21 day moving average shortly after the commodity channel index flashed a “Buy” signal by crossing over the zero line after being below -100. That initial rally took the stock to $10 before it came back down on a quick retrace.

That retracement found itself coming down nearly to the 61.8% at $8.28 in late November. After jumping above the 21 day on December 17th AFFX hasn’t looked back. Breaking through previous resistance at $10, the stock pushed higher through 52-week highs and now sits at $11.83. It’s firmly above a positively sloped 21 day here and the commodity channel index is slightly overbought at 89.22. More cautious investors can use the swing low at $11.25 as an area to add more exposure or the top end of a stop-loss range of the stock where it trades now.