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Bruker Poised on Strategic Initiatives amid Currency Woes

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On Oct 8, 2015, we issued an updated research report on Massachusetts-based Bruker CorporationBRKR , which designs and manufactures proprietary life science and materials research systems and associated products.

We are currently looking forward to the company's recent agreement to acquire Jordan Valley Semiconductors, which will enable the company to offer unique solutions for advanced problems in nanotechnology research and semiconductor metrology. According to Bruker, with trends toward increased connectivity and access to large amounts of data, new nanometrology needs are driving growth opportunities in advanced semiconductor nodes.

Moreover, the company recently received five orders from Europe and Brazil for ultra-high field (UHF) nuclear magnetic resonance (NMR) spectroscopy systems. These are expected to help it tap the growing market of mass spectrometry.

We note that majority of Bruker BioSpin's customers include academic and government customers as well as pharmaceutical and biotechnology companies. Although Bruker BioSpin's second-quarter 2015 performance was affected by soft demand for Nuclear Magnetic Resonance (NMR) products, the company expects the scenario to turn around with new orders from former Agilent customers, partly because of the business that the company picked up after Agilent's (one of Bruker's major competitors) exit from the NMR market. Further, Bruker's recent launch of the next-generation gigahertz NMR technology is expected to ramp up the company's top-line growth in 2016 and beyond.

Notably, Bruker has been pursuing a number of strategies like divestiture of certain non-core businesses, outsourcing of various manufacturing activities and transferring or ceasing operations at certain facilities, to improve its financial performance. Lately, Bruker successfully completed its CAM restructuring program, a quarter ahead of management's expectation. As a result of the CAM restructuring and other strategic initiatives, management now expects adjusted operating margin to increase by over 100 basis points in 2015. We believe such initiatives should benefit the company's future operating results.

On the flip side, unfavorable foreign currency fluctuations continue to hamper Bruker's growth trajectory. Evidently, changes in foreign exchange rates impacted Bruker's revenues by 12% and earnings by 5 cents per share in the second quarter. Moreover, headwinds such as unfavorable economic conditions and competitive threats continue to pose concern.

Currently, the stock carries a Zacks Rank #3 (Hold).

Key Picks in the Sector

Better-ranked medical stocks include ICU Medical, Inc. ICUI , NuVasive, Inc. NUVA and Baxter International Inc. BAX . All the three stocks sport a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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