PerkinElmer Misses Earnings and Rev Est

Zacks

PerkinElmer (PKI) reported first-quarter adjusted (excluding one-time expenses) earnings per share of 36 cents, missing the Zacks Consensus Estimate of 48 cents and lower than the year-ago earnings per share of 43 cents.

Income from continuing operations, which includes extraordinary and one-time items, was $32.3 million (or 28 cents per share), up 46.3% year over year.

Revenues

Revenues stood at $505.4 million in the reported quarter, down 1.1% year over year, missing the Zacks Consensus Estimate of $534 million.

Segment-wise Revenues

Sales from the Human Health segment stood at $281.3 million, up marginally 0.2% year over year.  Revenues from the Environmental Health segment amounted to $224 million, down 2.7%.  

Margins

Adjusted gross margin was 47.3% in the first quarter, lower than 49.7% in the prior-year quarter. Adjusted operating margin was 12.6%, down 270 basis points on a year-over-year basis.  

Adjusted operating margin at the Human Health segment was 17.8%, down 160 basis points year over year. Adjusted operating margin at the Environmental Health segment was 10.4%, down 440 bps from the year-ago quarter.

Balance Sheet

Cash and cash equivalents amounted to $125.9 million as of March 31, 2013, down 26.6% year over year. Long-term debt, excluding minor short-term borrowings, was $1,019.3 million, up 8.6% on a year-over-year basis.

Outlook

The company currently forecasts adjusted earnings per share for 2013 in the range of $2.00 to $2.10 (earlier $2.24 to $2.32). Reported earnings per share from continuing operations are forecast in the range of $1.30 to $1.40 (earlier $1.57 to $1.65). Organic revenue is expected to increase in the low-single digit (earlier mid-single digit).

PerkinElmer has established itself as a market leader, particularly in the genetic screening segment, and holds one of top two market share position in several important subsets of the life sciences technology and genetic screening businesses.

The company continues to execute well across several product lines aided by rebounding markets and cost containment efforts. PerkinElmer has transferred select manufacturing to China. The company has increased its productivity and improved product mix in favor of higher value added products.

PerkinElmer, however, operates in a highly competitive industry characterized by rapid technological change and evolving industry standards. As a result, the company must make large investments in R&D in order to retain a competitive pipeline. PerkinElmer competes with Thermo Fisher Scientific (TMO) 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 rapidly evolving company.

The stock carries a Zacks Rank #3 (Hold). Cyberonics Inc. (CYBX) and Abiomed, Inc. (ABMD) are Zacks Rank #1 (Strong Buy) and Zacks Rank #2 (Buy) stocks, respectively, which are expected to do well.
 

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