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Bruker (BRKR) BSI & BEST Arms Drive Growth Amid Competition

Bruker Corporation BRKR is gaining strength across the BSI and BEST businesses. The ongoing rebound in businesses within the Nano Group also seems encouraging. The company’s growing investments in Project Accelerate 2.0 initiatives are an added advantage. However, headwinds such as unfavorable economic conditions and competitive threats continue to pose a concern. The stock currently carries a Zacks Rank #3 (Hold).

Bruker ended the first quarter of 2022 on a bullish note, with better-than-expected earnings and revenues. Strong performances across all geographies buoy optimism. Revenue growth across the BSI and BEST businesses drove the top line in the reported quarter. The company’s timsTOF platform continues to witness strong adoption in 4D proteomics, epiproteomics and multiomics.

Meanwhile, revenues for the company’s NANO advanced X-ray and NANO surfaces tools delivered strong growth in the quarter. The company’s raised organic revenue growth outlook for 2022 indicates that this growth momentum will continue. Strong solvency is an added advantage.

Bruker’s Nano Group microelectronics and semiconductor metrology tools performed well during 2021, with ongoing strength in bookings and backlog.

In the first quarter, revenues in the Nano Group climbed 15.6%. NANO's academic, industrial and semiconductor metrology markets all remain strong. Revenues for the NANO advanced X-ray and NANO surface tools delivered strong growth in the quarter and NANO's microelectronics and semicon metrology tools performed very well, with strong bookings and backlog.

In first-quarter 2022, BSI segment organic revenues increased 9.5% year over year, driven by broad-based customer demand. Geographically and on an organic basis, North America revenues grew in the low 30% range. The Asia Pacific grew in the high-single-digit percentage. Rest of the world’s first-quarter 2022 revenues were significantly higher in the low 40% range.

Bruker Corporation Price

Bruker Corporation Price
Bruker Corporation Price

Bruker Corporation price | Bruker Corporation Quote

Bruker’s CALID Group too has been making decent progress lately. In the first quarter, the business recorded a year-over-year improvement of 5.6%, with strong growth in microbiology and molecular spectroscopy. The company’s timsTOF platform continues its adoption in 4D proteomics, epiproteomics and multiomics. Microbiology revenues delivered strong growth, driven by the demand for MALDI Biotyper systems and consumables. This was coupled with a gradual recovery of the tuberculosis molecular diagnostics products platform.

On the flip side, Bruker’s escalating operating expenses are concerning. In the first quarter, selling, general & administrative expenses rose 10.5%, whereas research and development expenses increased 3.7% year over year. This rise in operating expenses drove adjusted operating expenses by 8.4% year over year.

Bruker conducts 80% of its business in international markets. As a result, currency fluctuations continue to result in foreign currency transaction losses at the company. In addition, currency fluctuations could cause the price of Bruker’s products to be less competitive than its principal competitors' offerings.

Further, Bruker faces substantial competition in a consolidating industry and expects competition in all of its markets to increase further. Bruker BioSpin competes with companies that offer magnetic resonance spectrometers, mainly JEOL and Oxford Instruments. In the field of preclinical imaging, Bruker BioSpin faces a competitive threat from Perkin Elmer, Mediso, Trifoil, MR Solutions, RS2D, Visualsonics (Fuji Film) and others.

Bruker CALID's competitors in the life science markets and chemical and applied markets include Danaher, Agilent, GE-Healthcare, Waters, Thermo Fisher Scientific, Shimadzu, Hitachi and JEOL. BEST competes with Oxford Instruments and Luvata in low-temperature superconducting materials. Unfortunately, a number of Bruker’s peers have expanded their market share in recent years through business combinations. Other companies may also choose to enter Bruker’s fields of operation in the near future.

Over the past year, Bruker has underperformed the industry it belongs to. The stock has declined 17.8% compared with the industry’s 14.6% fall.

Key Picks

A few better-ranked stocks in the broader medical space are Alkermes plc ALKS, AMN Healthcare Services, Inc. AMN and Medpace Holdings, Inc. MEDP.

Alkermes has an estimated long-term growth rate of 25.1%. Alkermes’ earnings surpassed estimates in the trailing four quarters, the average surprise being 350.5%. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Alkermes has outperformed the industry in the past year. ALKS has gained 14.4% against the industry’s 45.5% decline in the said period.

AMN Healthcare has a long-term earnings growth rate of 1.1%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 15.6%, on average. It currently flaunts a Zacks Rank #1.

AMN Healthcare has outperformed its industry in the past year. AMN has gained 3% against the industry’s 54.9% fall.

Medpace has a historical growth rate of 27.3%. Medpace’s earnings surpassed estimates in the trailing four quarters, the average surprise being 17.1%. It currently has a Zacks Rank #2.

Medpace has outperformed its industry in the past year. MEDP has declined 23.8% compared with the industry’s 54.9% fall.

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