We upgrade our recommendation on
) to Outperform based on its third quarter results. Earnings per
share of 45 cents surpassed the Zacks Consensus Estimate by a
Net income from continuing operations was approximately $29
million in the quarter (or 25 cents per share), up 3.5% year over
year. Net income was $29.6 million, down 19.1% on a
Revenues improved 12.5% year over year to $509.6 million in the
reported quarter and surpassed the Zacks Consensus Estimate of
$505 million. Revenues grew 6% year over year on an organic basis
after adjustment for acquisitions which contributed 8% to the
growth in revenues in the quarter and a 3% drop accounting for
negative impact of foreign currency fluctuation.
Human Health segment revenues were $257.2 million, up 24.5% (up
10% on an organic basis) year over year. Revenues from the
Environmental Health segment amounted to $252.4 million in the
quarter, up 2.5% (up 3% on an organic basis).
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 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 would have to make large
investments in R&D in order to retain a competitive pipeline.
PerkinElmer competes with
Thermo Fisher Scientific
) among others.
PerkinElmer's exposure to poor end market visibility might result
in a relatively unattractive risk-reward trade-off for the stock.
However, the company's operations, both sales and manufacturing,
are diversified on a geographic basis. It has emerged as a
higher-growth, higher-margin company vis-à-vis its peers. The
stock carries a short-term Zacks #2 Rank (Buy).
PERKINELMER INC (PKI): Free Stock Analysis
THERMO FISHER (TMO): Free Stock Analysis
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