Shares of Fluidigm (NASDAQ: FLDM) gained over 13% today and have now increased 60% since the beginning of 2019. There isn't a specific news item sending the stock higher today. The business finally got around to publishing its fourth-quarter 2018 earnings presentation slides on its website this week (the conference call was held in early February), but aside from a better explanation of the opportunity at hand for the technology platform, there wasn't much new information.
However, the laboratory hardware specialist was the subject of a caller's question on Mad Money Lightning Round earlier this week. Jim Cramer simply stated, "Everything in this space is a buy. It's good to own." I think investors need to conduct a little more research than that before using their hard-earned money to own a piece of a business, but Fluidigm was my top stock to buy in February.
As of 11:30 a.m. EDT, the stock had settled to a 6.7% gain.
Fluidigm designs, manufactures, and markets specialized laboratory hardware in the field of single-cell analysis using a technology called microfluidics. Biologists are awful at naming fields of study ("bioengineering" doesn't actually use engineering principles, "synthetic biology" is not the best term for building public trust, and so on), but they actually got it right with single-cell analysis, which is exactly what it sounds like: observing how single cells behave in their environment.
Whether that observation takes place in a liquid or a complex tissue sample, Fluidigm's machines help researchers get a better understanding of how biological systems interact. The information has become invaluable for developing immuno-oncology drugs, discovering new molecular targets for treating diseases, and testing whether or not gene therapies are having the desired effect on a tissue.
After struggling for years to find a way to monetize its expertise, Fluidigm may have finally turned a corner in 2018. The installed base of its most important machine is rising, and the annual value of the chemicals sold to operate the machine is increasing. If the trend continues, the business might have reached an inflection point last year and may finally be trekking toward sustainable operating profits.
To be blunt, Fluidigm is a little expensive now relative to its near-term growth potential. When I named the stock my top buy in February, I was thinking about the next several years. After all, it will take another two years or so before the business is churning out operating profits. While that long-term growth potential remains intact, the fact that shares have gained 40% in the last month may be sign that investors can wait for a better entry point.
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