Agilent To Acquire Lasergen For $105M, Strengthens Portfolio

Agilent Technologies Inc. (NYSE:A) has agreed to acquire the remaining 52% stake in a privately-held company, Lasergen, Inc. for $105 million. The deal is subject to customary closing conditions and regulatory approval.

Their relationship dates back to March 2016, when Agilent had acquired a 48% stake in the company. Both the companies have put their hands together to develop a next-generation sequencing (NGS) workflow for clinical purposes, based on Lasergen's key technology named Lightning Terminators chemistry.

Texas-based Lasergen is an emerging biotechnology company that focuses on the development of innovative technologies for DNA sequencing. Lasergen’s Lightning Terminators provide unique photocleavable terminator chemistry with faster reaction kinetics and robust cleavage properties.

Following the deal, the company’s share price rose 1.54%. However, shares of Agilent have slightly underperformed its industry in the 12-month period. The stock has returned 24.3% compared with the industry’s gain of 28.7%.

Deal Rationale

The acquisition will allow Agilent to strengthen its presence in the molecular diagnostics market. Molecular diagnostic tests are used to detect specific sequences in DNA or RNA, including single nucleotide polymorphism (SNP), deletions, rearrangements, insertions and others to further diagnose the disease.

Per a research report from marketsandmarkets.com, the global molecular diagnostics market is projected to reach $10.12 billion by 2021 from $6.54 Billion in 2016, witnessing compound annual growth rate (CAGR) of 9.1% from 2016 to 2021.

Currently, the healthcare sector is witnessing a revolution. Personalized medicine is taking center stage as it can provide improved patient care and better manage costs by administering the most appropriate treatment to individuals. Given the strong growth in this market, we believe that the Lasergen deal will help Agilent cash in on the fast-growing molecular diagnostic market.

The deal complements Agilent’s own product expansion efforts and will help it to offer better services to its customers.

Jacob Thaysen, the President of Agilent’s Diagnostics and Genomics Group said, “Building a next-generation sequencing workflow for clinical applications is a critical component to Agilent’s diagnostics strategy to fight cancer and constitutional diseases”. “We are focused on delivering patient-centric, actionable information for clinical decisions. Ensuring an integrated customer experience across all of our diagnostic modalities is essential and will become a key differentiator going forward.”

Bottom Line

Agilent Technologies is a broad-based original equipment manufacturer of test and measurement equipment. The company has been supplementing organizational growth with strategic acquisitions and collaborations.

Over the past few years, strategic acquisitions have played an important role in shaping Agilent’s growth trajectory. The buyouts of Luxcel Biosciences (January 2018), Cobalt Light Systems (July 2017), Multiplicom NV (January 2017), Seahorse Bioscience and iLab Solutions (2016) have expanded its product portfolio.

Last month, the company agreed to acquire privately held Advanced Analytical Technologies (“AATI”) for $250 million. The deal will strengthen Agilent’s capillary electrophoresis solutions portfolio. It also expands the company’s footprint in varied industries like pharmaceutical, life sciences, agriculture and biofuels.

We remain optimistic about Agilent's broad-based portfolio and increased focus on segments with higher growth potential.

Agilent Technologies, Inc. Price and Consensus

Agilent Technologies, Inc. Price and Consensus | Agilent Technologies, Inc. Quote

Zacks Rank & Other Stocks to Consider

Agilent has a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the technology sector are Stamps.com Inc. (NASDAQ:STMP) , PetMed Express (NASDAQ:PETS) and ASOS Plc (NYSE:A) . While Stamps.com sports a Zacks Rank #1 (Strong Buy), PetMed and ASOS Plc carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings per share growth rate for Stamps.com, PetMed and ASOS Plc is projected to be 15%, 10% and 27%, respectively.

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