) recently reported that it had completed the takeover of
Shanghai Haoyuan Biotech Co. Ltd., which is a Chinese company
focused on diagnosing infectious disease. With this takeover,
PerkinElmer further cements its role as a global leader in
diagnostics. The acquisition strengthens PerkinElmer's role in
the Chinese clinical diagnostics arena as well as nucleic acid
screening of blood.
PERKINELMER INC (PKI): Free Stock Analysis
THERMO FISHER (TMO): Free Stock Analysis
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Haoyuan provides PerkinElmer with four infection assays, which
are recognized by China's State Food and Drug Administration
(SFDA). PerkinElmer believes that by acquiring Haoyuan's
equipment and reagents, it will be in a strong position to sell,
in the Chinese market, sophisticated assays and systems for
detecting infections in the blood.
PerkinElmer paid $38 million in a cash deal along with the
possibility of additional payments following accomplishment of
sales targets. The takeover is slated to be neutral to adjusted
earnings in 2012 and 2013 and subsequently turn accretive.
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 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).