A regional clinical laboratory with no Street following, Bio-Reference Laboratories (BRLI) has seen its shares surge from 3.45 in August to nearly 6 lately. One reason: It has been diversifying--and posting record sales and earnings.
"Bio-Reference is our kind of stock," says Shelagh Hughes of Kennedy Capital Management, which manages $1.6 billion. Kennedy owns 300,000 shares, or 2% of the total. "It is earnings-positive, with a good growth story and no long-term debt. It's totally undiscovered and undervalued," she says, adding that Bio-Reference is "attractive to major labs." Based on recent deals, the stock is worth 9 in a buyout, says Hughes.
The largest independent full-service lab in the Northeast, Bio-Reference specializes in genomics, oncology, and AIDS testing. On Jan. 22, 2002, Bio-Reference formed an alliance with Roche Group's Roche Diagnostics, whereby Roche invested $1 million and will market and manage Bio-Reference's Net-based CareEvolve unit. CareEvolve provides doctors with a comprehensive system for lab reports, and it links doctors with patients and insurers to lift productivity. Hughes figures the company, which earned 24 cents a share on sales of $80 million in the year ended Oct. 31, 2001, will post 20% annual earnings and revenue gains over the next two years. By Gene G. Marcial