Biosensors

Biosensors: 3QFYMar13 results below consensus. Revenue and net profit declined 4% and 13% respectively, driven largely by weaker-than-expected licensing royalty revenue from Japan (down 38% yoy due to lower pricing and increased competition in Japan). Nomura expects the near term stock reaction to be negative due to the lower than expected results, and downgrade in mgt guidance for revenue growth for the year to 15-20% from 20-30% previously. Deutsche maintains its Hold rating and TP $1.30, notes the recent stock rally was based on anticipated acquisitions, but says it remains perplexed as any acquisition would take time to be accretive. On the positive side, Nomura and Credit Suisse have Buy (TP $1.80) and Outperform (TP $1.96) ratings respectively, noting that Terumo’s comments that its sales decline in Japan could be bottoming, and that Biosensors would collaborate with Terumo to promote Nobori in Japan. Mgt indicated that the company is in various stages of discussion with several potential M&A targets, some of which are near completion. CIMB also has an Outperform rating with TP $1.75.