Wednesday, June 4, 2008

Abaxis (ABAX) strong in blood test field.

Abaxis Inc is a medical equipment company that sells Piccolo blood test machines. The company has greatly increased numbers and created long term contracts through point of sale. The company sells its machines primarily in the United States and also has a presence in Japan through a distribution deal.

According to the October 29th issue of Forbes magazine the company closed deals with 60% of MDs that it attempted to sell to. The Piccolo machines sell for $15,000 and use discs exclusively sold by Abaxis which provides a nice revenue stream. The number of offices with the machine was at .2% in this article. At the time of publication the company was just entering the veterinary field as well.

Forbes named Abaxis #11 in its annual best small companies in 2007. Previously in 2006 the company was listed at 25. Perhaps the biggest honor was Abaxis's CEO named entrepreneur of the year by Forbes for 2007.

Abaxis has a market cap of between $500 million and $750 million currently which makes it a growing small cap with plenty of room to grow. The company has no debt on its books. The company is represented in the S&P 600 Smallcap and S&P 1500 Supercomp.

A new machine was launched in September of 2007 called the HM5. The company just announced record sales for both the 3rd and 4th quarters of fiscal 2008. The discs used for the machines are being sold at a higher price and are recognized at a lower cost to make which will increase profit margins over the next year substantially. International sales make up 16% of the company's sales.

Abaxis sold 32 instruments at the North American Veterinarian Conference. The company sold 105 Piccolo human blood test machines in the month of Decmeber 2007. Eight hundred and eighty instruments total in the third quarter of 2008 and has the capacity to make 1000 instruments a quarter now and an unlimited potential with the addition of new vendors according to the conference call for the third quarter.

The company said they had a goal of $1 per share in earnings for fiscal 2008. I see them exceeding this and creating great shareholder value by producing more disks and tapping the international market. They also had announced that they planned to explore heartworm tests on animals using their machines. Shares have been as high as $40 the past 52 weeks. The shares are currently at $29.41 in after hours trading. I have a price target of $45 by 07/01/10.

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