We have maintained our Neutral recommendation on
) following its mixed fourth-quarter 2012 results. Earnings for
the quarter beat the Zacks Consensus Estimate but sales missed.
Acquisitions and gains across international markets led to higher
revenues in the fourth quarter. The company registered healthy
results in its Fine Chemicals (SAFC) division.
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 the company's reach
into the promising new market of biologic drugs, should add to
its growth in 2013. Sigma-Aldrich also remains committed to
offering returns to its shareholders through cash dividends and
However, the company's research business, especially with large
pharmaceutical companies, is expected to continue to face
economic challenges given the uncertainties across the U.S. and
Europe. Its research sales remain affected by funding
uncertainties in the U.S. due to budget constraints.
Moreover, Sigma-Aldrich, which generates roughly 67% of its sales
from the overseas markets, is highly exposed to currency exchange
translation. Negative currency impact on earnings was roughly 22
cents a share for full-year 2012. Unfavorable currency swings may
continue to weigh on the company's revenues and earnings.
Sigma-Aldrich currently maintains a Zacks Rank #3 (Hold).
Other Stocks to Consider
Other companies in the specialty chemical space with favorable
Zacks Rank are
American Pacific Corporation
). All of them hold a Zacks Rank #1 (Strong Buy).
AMER PAC CORP (APFC): Free Stock Analysis
(NVZMY): ETF Research Reports
PENFORD CORP (PENX): Free Stock Analysis
SIGMA ALDRICH (SIAL): Free Stock Analysis
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