We have reaffirmed our Neutral recommendation on lab chemical
and life sciences company
). While acquisitions and expansion initiatives in high growth
markets are expected to drive its results this year, we take a
cautious stance considering the lingering weakness in the
company's research business.
AMER VANGUARD (AVD): Free Stock Analysis
FERRO CORP (FOE): Free Stock Analysis Report
MINERAL TECH (MTX): Free Stock Analysis
SIGMA ALDRICH (SIAL): Free Stock Analysis
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Sigma-Aldrich's first-quarter 2013 adjusted earnings, reported on
Apr 25, beat the Zacks Consensus Estimate while sales met.
Revenues rose modestly year over year as gains from acquisitions
were partly offset by the impact of unfavorable currency swings
and fewer shipping days. Sigma-Aldrich backed its guidance for
Sigma-Aldrich's significant investments in sales, marketing and
R&D initiatives are generating demand for its products. The
company is seeking to take advantage of country-specific
opportunities by expanding its presence in high-growth emerging
markets. It is actively expanding its foothold in the
Asia-Pacific region, especially in the fast-growing emerging
markets of India and China.
The BioReliance acquisition, which extended Sigma-Aldrich's reach
into the promising new market of biologic drugs, should add to
its growth in 2013. The company also remains committed to
offering returns to its shareholders through cash dividends and
share repurchases. Sigma-Aldrich, in Feb 2013, announced a
roughly 8% hike in its quarterly cash dividend to 21.5 cents per
However, Sigma-Aldrich's research business, especially with large
pharmaceutical companies, is expected to continue to face
challenges due to weak academic spending in the U.S. and Europe.
The company expects uncertainty surrounding academic funding (in
particular in the U.S. due to sequestration) to sustain through
the remainder of 2013.
Moreover, Sigma-Aldrich, which generates roughly 67% of its sales
from the overseas markets, is highly exposed to currency
headwinds. Unfavorable currency translation may continue to weigh
on the company's revenues and earnings moving ahead.
Other Stocks to Consider
Other companies in the specialty chemical space with favorable
Zacks Rank are
American Vanguard Corp.
Minerals Technologies Inc.
). While American Vanguard holds a Zacks Rank #1 (Strong Buy),
both Ferro and Minerals Technologies retain a Zacks Rank #2