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Hilliard Lyons analyst Stephen O'Neil noted Monday that a recent drop in the stock price, which came after third-quarter revenue fell below analyst estimates, was partly due to lower than expected sales in the Cincinnati company's life sciences division.
But the key products at Meridian, which makes rapid diagnosis test kits for infectious diseases and licenses technology, continue to grow and Meridian will likely also benefit from new product launches, he wrote in a note to clients.
O'Neil estimates 2008 earnings of 74 cents a share and 2009 earnings of 90 cents a share. The mean estimate of analysts polled by Thomson Reuters were per-share profits of 73 cents in 2008 and 89 cents in 2009.
Meanwhile, at C.L. King analyst Ross Taylor on Monday lowered his 2009 per-share earnings view to 88 cents from 89 cents and his 2010 estimate to $1.03 from $1.05 because of the lower life sciences unit revenue.
Taylor reiterated his accumulate rating on the stock. The outlook for Meridian's diagnostic business, which contributes 80% of its revenue and 89% of income, remains "very strong," he wrote in a research note.
"We think the decline in the stock represents an attractive opportunity to buy the stock at a lower valuation," he said.
Meridian shares were up 4.6% at $25.08 in afternoon trading.
Brigid Gaffikin bg/vj
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