PerkinElmer Remains Neutral - Analyst Blog


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We maintain our Neutral rating on PerkinElmer ( PKI ) based on its first quarter results and lack of direction. Its first quarter earnings per share of 43 cents surpassed the Zacks Consensus Estimate of 41 cents.

Net income from continuing operations was $22.1 million, or 19 cents per share, in the first quarter versus net income of $27.3 million, or 24 cents per share in the prior-year quarter. The results for the reported quarter include non-cash expenses pertaining to takeovers in 2011.

Revenues from continuing operations stood at $510.9 million in the reported quarter, up 14% year over year, beating the Zacks Consensus Estimate of $509 million.

PerkinElmer projects reported earnings per share in a band of $1.27 to $1.32 (earlier $1.22 to $1.28). The company expects adjusted earnings per share of about $2 to $2.05 (earlier $1.98 to $2.04). PerkinElmer reiterated its guidance for organic revenue to increase in the mid-single digits.

PerkinElmer has established itself as a market leader, particularly in the genetic screening segment, and holds one of top two market share positions in several important subsets of the life sciences technology and genetic screening businesses.

The company continues to execute well across all its product lines aided by rebounding markets and cost containment efforts. PerkinElmer's transfer of select manufacturing to China has expanded its operating margins. The company has increased its productivity and improved product mix in favor of higher value added products, resulting in higher operating margins.

PerkinElmer, however, operates in a highly competitive industry characterized by rapid technological change and evolving industry standards. As a result, the company must make large investments in R&D in order to retain a competitive pipeline. PerkinElmer competes with Thermo Fisher Scientific ( TMO ) among others.

PerkinElmer's exposure to poor end market visibility might result in a relatively unattractive risk-reward trade-off for the stock. We currently have a Neutral recommendation on PerkinElmer. The stock currently retains a Zacks #2 Rank, which translates into a short-term Buy recommendation.

PERKINELMER INC (PKI): Free Stock Analysis Report
THERMO FISHER (TMO): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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