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Bruker (BRKR) Hits New 52-Week High: What's Driving It?

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Zacks Equity Research
·4 min read
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Shares of Bruker Corporation BRKR reached a new 52-week high of $54.81 on Dec 8, before closing the session marginally lower at $54.59. The stock has rallied 24.1% since its third-quarter 2020 earnings announcement on Nov 2.

The company is witnessing an upward trend in its stock price, prompted by its solid performance in the third quarter despite the pandemic-led business disruptions. A robust performance by the CALID arm also buoys optimism. Further, the company’s initiatives to combat the coronavirus crisis boosted market sentiments. However, a stiff competitive landscape and exposure to currency movement are concerning for the company.

Let's delve deeper.

Encouraging Q3 Performance

Bruker’s impressive performance in the third quarter of 2020 buoys optimism. Customer acceptance of the company’s Avance NEO 1.2 GHz NMR system during the quarter bodes well. Recent buyouts and product launches look impressive. Strength in Bruker’s BSI Life Science and robust performances in Europe and Asia Pacific buoy optimism. Adjusted operating margin expansion also looks encouraging.

Other Growth Drivers

Potential of the CALID Group: Bruker’s CALID Group recorded significant improvement year over year during the third quarter. This primarily resulted from continued growth in Daltonics microbiology and infectious disease diagnostics, and Life Science mass spectrometry businesses. CALID's microbiology and infectious disease consumables recorded significant growth year over year. Further, Bruker’s high-end diagnostics business gained from strength in polymerase chain reaction (“PCR”) products, mainly in Europe.

The company, in October, released a complete GPU-based device enabling proteomics database search in real time — PaSER. This builds on the recently announced acquisition of Integrated Proteomics Pipeline (IP2) software platform. Bruker had acquired the IP2 search engine and proteomics workflow software platform in September, which was developed by Integrated Proteomics Applications Inc.

Initiatives to Combat the Coronavirus Crisis: Bruker’s Germany campus in Bremen is currently offering a pilot COVID-19 at work testing program for its factory workforce. The program, implemented in April, offers weekly company-paid voluntary COVID-19 PCR tests to employees in the factory.

Further, the company’s microbiology and infectious disease diagnostics portfolio has added a SARS-CoV-2 PCR test, and the Nuclear Magnetic Resonance and mass spec systems, which are used in critical diseases, therapeutic and vaccine research. During the third quarter, the company had piloted COVID-19 rapid antigen tests at some of its European sites and in customer labs to broaden its COVID-19 testing portfolio further.

Downsides

Exposure to Currency Movement: Bruker conducts the majority of its business in international markets. As a result, currency fluctuations continue to result in foreign currency transaction losses at the company. Additionally, currency fluctuations could cause the price of Bruker’s products to be less competitive than its principal competitors' offerings.

Competitive Landscape: Bruker faces substantial competition in a consolidating industry and expects competition in all of its markets to increase further. 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.

Zacks Rank & Key Picks

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

Some better-ranked stocks from the broader medical space are Hologic, Inc. HOLX, Thermo Fisher Scientific Inc. TMO and ResMed Inc. RMD.

Hologic’s long-term earnings growth rate is estimated at 17.4%. The company presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Thermo Fisher’s long-term earnings growth rate is estimated at 18%. It currently carries a Zacks Rank #2 (Buy).

ResMed’s long-term earnings growth rate is estimated at 14.5%. The company presently carries a Zacks Rank #2.

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