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Bruker (BRKR) Down 7.4% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research

A month has gone by since the last earnings report for Bruker (BRKR). Shares have lost about 7.4% in that time frame, underperforming 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 catalysts.

Bruker Q2 Earnings Beat Estimates

Bruker Corporation delivered adjusted earnings per share (EPS) of 33 cents in the second quarter of 2019, up 32% from the year-ago figure. The figure surpassed the Zacks Consensus Estimate by 6.5%.

On a reported basis, earnings were 23 cents a share compared with the year-earlier figure of 20 cents.

Revenues in Detail

Bruker registered revenues of $490.2 million in the second quarter, up 10.5% year over year. The top line also surpassed the Zacks Consensus Estimate by 2.7%.

Excluding a positive effect of 8.7% from acquisitions and a 3% negative impact from changes in foreign currency rates, Bruker recorded organic revenue growth of 4.8% year over year.

The company’s organic revenue growth was driven by strength in Bruker Scientific Instruments (BSI) and BEST segments.

Geographically, the United States saw 16.4% growth in the reported quarter. Meanwhile, European revenues rose 3.4% year over year. Also, Asia Pacific revenues grew 13.5%. In Other category, revenues rose 12.6%.

During the second quarter, Bruker’s BioSpin Group revenues increased 7.9% from the year-ago quarter. Revenues in the NANO group rose 12.3%, fueled by a strong uptrend in the academic research and industrial research markets. CALID revenues were up 9.8% year over year.

Margin Trend

Gross margin in the quarter under review expanded 75 basis points (bps) to 47%. Meanwhile, selling, general & administrative expenses climbed 12.6% to $124.5 million. Research and development expenses went up 11.2% year over year to $48.5 million. Overall, adjusted operating margin expanded 22 bps to 11.7%.

Financial Position

Bruker exited the second quarter of 2019 with cash and cash equivalents of $282.5 million, down from $298.8 million at the end of the first quarter. Year-to-date net cash provided by operating activities was $24.8 million in comparison to $79.9 million a year ago.

2019 Guidance

Bruker reaffirmed its 2019 outlook. For the full year, the company reiterates revenue growth projection at 7-8%, including nearly 4.5-5.5% organic revenue rise and an estimated 2.5% headwind from adverse foreign currency translation. The Zacks Consensus Estimate for the metric is $2.04 billion.

The company continues to envision year-over-year expansion of 90-120 bps in adjusted operating margin over its fiscal 2018 non-GAAP operating margin of 16.8%. 

For 2019, Bruker maintains adjusted EPS view at the range of $1.57-$1.61. The Zacks Consensus Estimate of $1.62 is above the guided range.

How Have Estimates Been Moving Since Then?

Fresh estimates followed a downward path over the past two months. The consensus estimate has shifted -7.57% due to these changes.

VGM Scores

Currently, Bruker has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, 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 #3 (Hold). We expect an in-line return from the stock in the next few months.



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