Immucor Inc. (BLUD): Trading buy ahead of the quarter and full-year 2010 earnings guidance Monday night (6/1/09). Stock will likely trade 15% to 20% higher ($17~ range) as I fully expect the following to occur: 1) FY2010 EPS of $1.20 (higher by 5 cents to 10 cents of the street’s estimates) based on improved sales and estimates for BLUD’s new Galileo II machine. 2) A new buyback will likely be announced to the tune of 2 million to 3.5 million shares (5% of the float) as management takes advantage of a historically depressed stock and uses excess balance sheet cash to improve shareholder value. 3) Additional comments regarding the DOJ’s meaningless investigation (more to follow) will help ease investors only concern with the stock. Immucor Inc. (BLUD): Is the leading company in the blood bank equipment and reagent market---which seeks to prevent or even cure certain diseases and conditions through the testing and transfusing of blood and blood components worldwide. It is estimated that by 2018 Health Care related costs and expenses will account for 20% of the United States Gross Domestic Product (GDP), Immucor is a play off this growing trend. The company sports 50% market share in the United States with roughly 40 million or so blood donors annually and controls roughly 30% of the entire global market. For the full-year 2008, BLUD reported 73% of sales from the US, with the rest coming from overseas. 7,500 customers worldwide, with no single customer purchase in excess of 5% sales volume, thus it is also a weak dollar stock as well. The end markets for the company’s products include: 80% was generated from Hospitals, 15% from Donor Centers, and 5% from Clinical Labs. Revenue’s went from $113 million in 2004 to $261 million in 2008 which represents a 46.19% CAGR, net income went from $13 million in 2004 to $72 million in 2008 as gross margins expanded from 55.2% in 2004 to 71.0% in 2008 with estimates in the 71% to 73% range for the full-year 2009. The company operates 3 principal units: Galileo which is targeted at large hospitals handles 60 samples~ per hour, and sells for $120,000 per unit with annual reagent sales of roughly $140,000 per year. Echo which is targeted at small hospitals (50 to 400 bedside units) handles roughly half of the samples that the Galileo can handle, and sells for $60,000 per machine with annual reagent sales of roughly $40,000 per year. Lastly, the newly launch Galileo II (launch data Q12010) will act as an additional catalyst for growth. Just last night Immucor signed an agreement with Alverno Clinical Laboratories, LLC, one of the largest regional integrated systems in the nation, servicing 27 hospitals in the mid-west. Under the agreement Immucor will sell Alverno 24 Echo units and 2 Capture Workstations. Moreover, according to the agreement Immucor will act as the primary source for Alverno’s blood bank reagent needs (this is where Immucor really makes its profit). The CEO of Alverno Sam Terese was quoted as saying “We chose Immucor due to the exceptional functionality of the Echo instrument and its fit with LEAN operations as well as Immucor's commitment to improving transfusion medicine” This is a relatively large agreement given that the Department of Justice is looking into Immucor for possible price-fixing agreements with Johnson and Johnson. Clearly Alverno thinks the prices are more than fair. Bottom line: Immucor will likely trading substantially higher Monday night based on the following factors: 1) Raised EPS guidance 2) New buyback of common stock 3) The notion of a meaningless Department of Justice investigation 4) And reiteration of the company’s long-term growth prospect.

Cyberonics develops medical devices that provide vagus (part of the spinal cord) nerve stimulation therapy for the treatment of epilepsy and other debilitating neurological diseases. This system consists of implanting a generator that delivers an electrical single to an implantable lead attaches to the nerve—clearly this is a huge market. With approximately 0.6% of the Canadian population having epilepsy and 20MM Americans have had some form of an attack CYBX could benefit. "Despite our challenges with the (treatment-resistant depression) indication, U.S. epilepsy sales experienced some growth, and we continued to achieve double-digit growth in our international sales," said Dan Moore, president and chief executive officer. "We believe we will further increase sales of VNS Therapy for epilepsy patients, and our recent management changes are aimed at that objective." Cyberonics faces quite a few obstacles, but there are reasons to like this company. The company has been focused on defending their product for the use of depression and lack of sufficient data means the procedure is not reimbursable. This also means that patients who can't afford to pay out of pocket don't have access to the $25,000 procedure.

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