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Bruker Corporation BRKR is well poised for growth in the coming quarters, backed by a slew of product launches. A solid performance in the fourth quarter of 2020 and potential in the BSI Nano Group also buoy optimism. However, foreign-exchange fluctuations and persistent pandemic-led business challenges are major downsides.
Over the past year, this Zacks Rank #3 (Hold) stock has gained 85.9% compared with the 68.1% growth of the industry and 56.2% rise of the S&P 500.
The renowned provider of life science and materials research systems and associated products has a market capitalization of $10.23 billion. The company projects 6.7% growth for the next five years and expects to witness continued improvements in its business. Bruker surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed the same in one, the average surprise being 78.17%.
Let’s delve deeper.
Product Launches: We are upbeat about the slew of product launches by Bruker over the past few months. The company, in March, launched the Fourier 80 system, which is a next-generation, high-performance 80 MHz Fourier Transform Nuclear Magnetic Resonance benchtop spectrometer for multinuclear gradient spectroscopy, with industry-standard automation options in the United States and Canada. In January, Bruker announced receipt of the FDA’s clearance and the subsequent U.S. launch of the MBT Sepsityper Kit US IVD for rapid microbial identification of various microorganisms from positive blood cultures on the MALDI Biotyper CA System.
In December 2020, the company launched the CE-IVD-labelled FluoroType SARS-CoV-2/Flu/RSV winter four-plex polymerase chain reaction panel in Europe.
Potential in BSI Nano Group: We are upbeat about the segment’s performance over the past few months. In fourth-quarter 2020, revenues for NANO's microelectronics and semiconductor metrology products grew in double digits due to strength in semiconductor markets. Bruker, during the quarter, initiated additional restructuring and cost actions within the Nano group to improve the fundamental cost structure while investing in Nano's spatial biology and targeted multi-omics strategy.
The company anticipates high single-digit organic revenue growth at Nano groups in 2021. Overall, the Nano Group holds strong long-term potential on higher demand from industrial markets, semiconductors and growing academic markets.
Strong Q4 Results: Bruker’s better-than-expected results in fourth-quarter 2020 buoy optimism. Additional customer acceptance of the 1.2 GHz NMR system during the quarter bodes well. Strength in Bruker’s BSI Life Science and robust performances in Europe and Asia Pacific buoy optimism. Expansion of gross margin is encouraging as well. The company’s 2021 financial guidance with strong growth expectations over 2020 is also encouraging.
Exposure to Currency Movement: We are concerned about Bruker’s exposure to currency fluctuations as it rakes in a significant portion of its sales from international markets. As a result, currency fluctuations continue to result in foreign currency transaction losses for the company. In addition, currency fluctuations could cause the price of Bruker’s products to be less competitive than its principal competitors' offerings.
Coronavirus Dampeners: Bruker’s 2020 results reflected decline in both reported and organic revenues, primarily due to COVID-19-related disruptions. BioSpin group’s revenues registered significant decline due to COVID-related customer disruptions and installation delays, mostly in the first half of 2020. Segmental performance was dismal, primarily due to pandemic-led business disruptions.
Bruker has been witnessing an upward estimate revision trend for 2021. Over the past 90 days, the Zacks Consensus Estimate for its earnings per share has moved 3.5% north to $1.77.
The Zacks Consensus Estimate for first-quarter 2021 revenues is pegged at $508.8 million, suggesting a 20% rise from the year-ago reported number.
Some better-ranked stocks from the broader medical space are Hologic, Inc. HOLX, Hill-Rom Holdings, Inc. HRC and DENTSPLY SIRONA Inc. XRAY.
Hologic’s long-term earnings growth rate is estimated at 15.4%. The company presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hill-Rom’s long-term earnings growth rate is estimated at 7.3%. It currently carries a Zacks Rank #2.
DENTSPLY’s long-term earnings growth rate is estimated at 20%. The company presently carries a Zacks Rank #2.
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