Here's Why Investors Should Retain Bruker (BRKR) Stock Now
Bruker Corporation BRKR is likely to grow in the coming quarters due to the solid prospects of the Bruker Scientific Instruments (“BSI”) Nano and BioSpin group. The robust demand for differentiated instruments within the CALID group is highly encouraging. However, the company’s operations are subject to intense competition from its peers in the industry. Rising inflationary trends and other challenges may hurt Bruker’s operations and financial results.
In the past year, this Zacks Rank #3 (Hold) stock has increased 8.8% against the 10.9% fall of the industry and a 27% rise of the S&P 500 composite.
The renowned medical device company has a market capitalization of $10.2 billion. Bruker projects a long-term estimated earnings growth rate of 11.1% compared with 8% of the industry. BRKR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 10.19%.
Let’s delve deeper.
Upsides
BSI Nano Group Prospects Seem Bright: Over the past few quarters, NANO’s microelectronics and semiconductor metrology tools boomed with strong bookings and a strong backlog. As a group, revenues continue to be driven by the strength of end markets, including academic, government and industrial.
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Bruker Nano Life Science fluorescence microscopy is gaining on product innovation and research demand. The 2022 acquisition of Inscopix strongly contributed to the business growth in the third quarter of 2023. Bruker’s latest $108-million buyout deal of PhenomeX is highly complementary to NANO group’s existing cellular and sub-cellular analysis tools, including the high-performance CellScape spatial biology platform.
Strong Prospects of BioSpin: Throughout the nine months of fiscal 2023, the company delivered growth across biopharma, academic and government markets, industrial research and applied markets. Furthermore, Bruker’s new integrated data solutions software division also did well with its SciY scientific and lab software platform. In the third quarter, BioSpin’s revenue increase was primarily attributed to the strong demand for instruments, especially in Nuclear Magnetic Resonance (NMR) and software businesses.
Recently, the company installed a 1.2 gigahertz (GHz) NMR system at the National Gateway Ultrahigh Field NMR Center at Ohio State University. Earlier in 2023, the company lent its innovations to support the advanced life and materials science research infrastructure in the United Kingdom, with two orders for 1.2 gigahertz NMRs from the University of Warwick and the University of Birmingham.
CALID Group Holds Potential: Bruker’s CALID Group has been making decent progress lately, primarily because of the strong demand for differentiated instruments. The group is benefiting from sustained growth in the mass spectrometry business, including the FT-IR, Near IR and Raman molecular spectroscopy product lines.
Bruker’s timsTOF platform continues its adoption in 4D proteomics, epiproteomics and multiomics. The Optics business had two recent tender wins — a provision of more than 220 DE-tector explosive trace detectors for the Frankfurt and Zurich airports.
In June, the company announced transformative sensitivity on the 4D-Proteomics timsTOF platform with the launch of the new timsTOF Ultra. At the HUPO 2023 Congress held in Korea, Bruker announced further advances in timsTOF methods, consumables and software for next-generation, unbiased, high fidelity, four-dimensional, 4D proteomics and 4D multiomics.
Downsides
Inflationary Challenges May Hurt Margins: Like its peers, Bruker’s operations are prone to increasing inflation, geopolitical uncertainties, challenges regarding the availability of key raw materials and component fluctuations in foreign currency exchange rates and interest rates. The company has experienced supply-chain interruptions as a result of general global economic conditions, the threat of a potential recession and a tighter labor market. On a non-GAAP basis, the company’s gross margin was negatively impacted by a 100-basis point foreign exchange headwind in the third quarter of 2023.
A Competitive Landscape: Bruker faces substantial competition in a consolidating industry and expects competition in all of its markets to increase further. Primary competitors mainly include the established companies providing products using existing technologies that perform many of the same functions marketed by Bruker. 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.
Estimate Trend
The Zacks Consensus Estimate for Bruker’s 2023 earnings per share (EPS) has remained constant at $2.51 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $2.51 billion. This suggests a 7.3% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Haemonetics HAE, Insulet PODD and DexCom DXCM.
Haemonetics has an estimated earnings growth rate of 28.4% for fiscal 2024 compared with the industry’s 15.2%. HAE’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 16.1%. Its shares have increased 12.2% compared with the industry’s 1.2% rise in the past year.
HAE carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Insulet, sporting a Zacks Rank #1 at present, has a long-term estimated earnings growth rate of 39.2% compared with the industry’s 11.7%. Shares of the company have decreased 23.9% against the industry’s 1.2% rise over the past year.
PODD’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 105.1%. In the last reported quarter, it delivered an average earnings surprise of 77.5%.
DexCom, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 33.6% compared with the industry’s 13.8%. Shares of DXCM have increased 12.6% compared to the industry’s 5.6% rise over the past year.
DXCM’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.4%. In the last reported quarter, it delivered an average earnings surprise of 47.1%.
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