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Bruker (BRKR) Down 0.8% Since Last Earnings Report: Can It Rebound?

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  • BRKR

A month has gone by since the last earnings report for Bruker (BRKR). Shares have lost about 0.8% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Bruker due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Bruker Q3 Earnings Surpass Estimates, Margins Up

Bruker Corporation delivered adjusted earnings per share of 63 cents in the third quarter of 2021, skyrocketing 50% year over year. Moreover, the figure surpassed the Zacks Consensus Estimate by 40%.

The adjustments include expenses related to purchased intangible amortization, acquisition-related costs and restructuring costs, among others.

GAAP earnings per share for the quarter was 57 cents a share, reflecting a 62.9% surge from the year-earlier figure.

Revenues in Detail

Bruker registered revenues of $608.9 million in the third quarter, up 19.1% year over year. However, the figure surpassed the Zacks Consensus Estimate by 5.7%.

Excluding the positive impact of 0.3% from acquisitions and another 1% from favorable changes in foreign currency rates, the company saw organic revenue growth of 17.8%.

Solid performances by all the reporting segments driven by robust demand for the company’s solutions and products significantly drove the top line.

Geographically, the United States witnessed a 35.9% year-over-year rise in revenues in the reported quarter. Europe revenues rose 9.1% year over year whereas revenues in the Asia Pacific inched up 19.8%. Further, the Other category’s revenues climbed 13.7% year over year.

Segments in Detail

Bruker reports results under three segments, namely, BSI Life Science (comprising BioSpin and CALID), BSI Nano and BEST.

In the third quarter, BioSpin Group revenues improved 22.6% from the year-ago quarter to $186.5. The early revenue recognition of certain gigahertz NMR class system in China, which was previously projected to be delayed until the fourth quarter, contributed to top-line growth in the third quarter. BioSpin also recognized revenues for its third gigahertz class system, a 1.2-gigahertz NMR installed at Utrecht University in the Netherlands, this year during the third quarter.

CALID revenues rose 13.4% year over year to $194.2 million in the third quarter, which primarily resulted from continued growth in mass spectrometry and microbiology businesses along with strength in the FTIR/Near IR/Raman molecular spectroscopy products lines. Continued robust growth in the timsTOF unbiased 4D proteomics platform and a rebound in research MALDI TOF product line also drove the top line.

Total BSI Life Science revenues were $380.7 million, up 17.7% year over year.

Revenues in the Nano group climbed 18.9% to $174.9 million with advanced X-ray, Nano Surfaces and Nano Analysis tools registering a substantial year-over-year increase in revenues. This segment also benefitted from the acquisition of Canopy Biosciences' single-cell targeted proteomics tools and CRO Services in September 2020.

The BSI segment (including BSI Life Science and BSI Nano Segments) improved 18.1% year over year, including organic revenue growth of 16.8%.

In the third quarter, the company’s BEST segment revenues were $57 million, up 30.1% year over year. The solid segmental performance was driven by contributions from big science projects and a rebound in MRI superconductor demand from med-tech OEM customers. Despite healthy superconductor demand, this segment experienced supply-chain challenges due to material shortage and flow logistics.

Organically, BEST segment revenues improved 29.3%, net of intercompany eliminations.

Margin Trend

In the quarter under review, Bruker’s gross profit rose 24.3% to $308.7 million. Gross margin expanded 215 basis points (bps) to 50.7%.

Meanwhile, selling, general &administrative expenses rose 23.3% to $141.3 million. Research and development expenses went up 7.9% year over year to $52.1 million. Adjusted operating expenses of $193.4 million increased 18.7% year over year.

Adjusted operating profit totaled $115.3 million, reflecting a 35% surge from the prior-year quarter. Further, adjusted operating margin in the third quarter expanded a huge 224 bps to 18.9%.

Financial Position

Bruker exited the third quarter of 2021 with cash and cash equivalents, and short-term investments of $573 million compared with $608.1 million at the end of second-quarter 2021. Total long-term debt (including current portion) at the end of the third quarter of 2021 was $827 million compared with $829.3 million at the end of second-quarter 2021.

Cumulative net cash flow from operating activities at the end of the third quarter was $23.9 million compared with $82.4 million a year ago.

The company has a dividend payout ratio of 9% at present.

2021 Guidance

Bruker raised its financial outlook for 2021, to account for strong demand for its products and solutions during the first nine months of the current year.

It expects revenue growth of approximately 19.5-20.5%, up from the July-announced revenue guidance of 17-19%. The Zacks Consensus Estimate for revenues is pegged at $2.37 billion. Organic revenue growth is projected within 16.5-17.5%, up from the earlier guided range of 14-16%.

The company expects full-year adjusted EPS in the band of $2.05-$2.09, indicating an uptick of 52-55% from the 2020 reported figure (up from the previous expectation of $1.88-$1.93). The Zacks Consensus Estimate for the same is pegged at $1.92.

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

VGM Scores

Currently, Bruker has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Bruker has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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