We maintain a Neutral recommendation on
The company reported disappointing first-quarter 2012 results,
due to weak performance in developing markets and lower spending by
large pharmaceutical companies. However, we currently maintain a
Neutral rating on Waters as the company is very confident about
good growth in fiscal 2012, driven by stable demand for its
Waters Corporation is an analytical instrument manufacturer. The
company's products are used by pharmaceutical, life science,
biochemical, industrial, academic and government customers, who are
working in research and development, quality assurance and other
laboratory applications. The company believes its strong
competitive position and strategic market initiatives will
facilitate it to perform well as it moves ahead. Major competitors
of Waters are
Agilent Technologies Inc.
Thermo Fisher Scientific Inc.
Further, the company continues to see relevant stability in its
end markets and continued momentum in the acceptance of new
products. A rise in sales resulting from increase in pharmaceutical
customers is also beneficial for the company. Biopharmaceutical
development and QC testing continues to facilitate pharma
However, in the recent quarter, the company's result suffered
from declined capital spending by large pharmaceutical firms.
Further, performance in certain developing markets was also weak
during first-quarter 2012. Though the negative effects of these
were partially offset by smaller specialty and biopharma firms in
the U.S., total revenue inched down 2% year over year.
Sales from government agencies account for 5% of the company's
recent worldwide sales. During the first quarter, government and
university shipments declined at a mid-single-digit rate due to
significant reductions in global governmental spending. The
prevailing macroeconomic uncertainties are a matter of concern,
blurring the company's growth expectations for 2012 in relation to
its performance during the past two years.
Positively, the demand for the company's products and services
are intact. Based on this, the company is confident of attaining
good result in the remaining part of 2012. Waters has a strong
presence in the chromatography instrument market, which is expected
to grow annually over the longer term.
Further, the company continues to introduce new products. With
increased systems offerings of Discovery-branded instruments, the
TA division is expected to expand in 2012 and beyond. The division
will also benefit from expanding its applications footprint into
biological and high temperature material testing opportunities.
Waters Corporation currently has a Zacks #3 Rank (Hold
recommendation) over the next one-to-three months.
AGILENT TECH (A): Free Stock Analysis Report
PERKINELMER INC (PKI): Free Stock Analysis
THERMO FISHER (TMO): Free Stock Analysis Report
WATERS CORP (WAT): Free Stock Analysis Report
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