PFE - Luminex: Valuation Disconnect To The Downside; Remains In 'Show Me' Stage

• Luminex has had a volatile year that reflects FDA headwinds and a rotation out of Covid-19 exposure.
• Management had baked Covid-19 related sales into previous modelling but have downgraded FY2020 guidance by ~$5 million.
• FY 2021 growth of ~15% is now guided, but we need more evidence of capacity away from Covid-19 exposure, especially in cadence of S2A placements.
• Shares trade at a discount to peers on multiples, but ROIC < WACC and fair value skewed to the downside justify the low valuation.
• We are neutral on the company, as they are in a "show me" stage and must provide evidence of sequential growth outside of Covid-19 exposure alone.

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