Here's Why Investors Should Retain Bruker (BRKR) Stock Now
Bruker Corporation BRKR is well-poised to grow in the coming quarters, backed by the strong potential of the Bruker Scientific Instruments (“BSI”) BioSpin and CALID groups. In BioSpin, Bruker witnesses strength across its end markets, even from the new IDS (integrated data solutions) business. Strong solvency is also highly encouraging. However, the company’s operations are prone to macroeconomic challenges and intense competitive pressure, which may unfavorably impact its performance.
In the past year, this Zacks Rank #3 (Hold) stock has increased 20% against the 7.1% fall of the industry and a 24.8% rise of the S&P 500 composite.
The renowned medical device company has a market capitalization of $12.16 billion. Bruker projects a long-term estimated earnings growth rate of 13.2% compared with 11.2% of the industry. BRKR’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 11.4%.
Let’s delve deeper.
Upsides
BioSpin’s Robust Prospects: Bruker BioSpin’s products, which have specific applications in structural proteomics, drug discovery, research and food and materials science fields, provide customers with the ability to ascertain the structure, dynamics and function of specific molecules, such as proteins, as well as characterize and determine the composition of mixtures.
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In 2023, the segment registered growth across the biopharma, academic, government, industrial research and applied markets and in the new IDS division. The company also lent its innovations to support the advanced life and materials science research infrastructure in the United Kingdom. In the fourth quarter of 2023, Bruker installed the first 1.2 gigahertz NMR in the United States at Ohio State University and the 1.1 gigahertz NMR at the University of Wisconsin at Madison.
CALID Group Holds Potential: Bruker’s CALID Group is benefiting from the sustained growth in the mass spectrometry business, including the FT-IR, Near IR and Raman molecular spectroscopy product lines. In 2023, BRKR launched timsTOF Ultra, which provides market-leading sensitivity and throughput with expanded peptide coverage and more accurate quantitation in unbiased 4D single-cell cell lines and tissue proteomics. More enhancements were announced for timsTOF methods, consumables and software for the next-generation unbiased high-fidelity 4D proteomics and 4D multiomics.
In addition, Bruker became a majority investor in the Swiss start-up company MIRO Analytical AG, complementing the gas-analysis spectroscopy portfolio in the company’s Optics division with fast, compact, highest-precision QCL (Quantum Cascade Laser) multi-trace gas analyzers.
Strong Solvency but Leveraged Balance Sheet: At the end of the fourth quarter of 2023, Bruker reported cash and cash equivalents of $488.3 million against the corresponding current maturities of the long-term debt of $121.2 million. This suggests a sound financial position. Moreover, the total debt at the quarter end was $1.16 billion compared to $1.20 billion at the end of 2022.
Downsides
Macroeconomic Factors: With its wide presence in countries like the United States, Russia and certain European nations, Bruker continues to face uncertain economic conditions. Continued volatility in global financial markets might impact Bruker’s customers from obtaining adequate financing for their operations and proceeding with capital spending initiatives. This may lead to a drop in sales volume, potentially affecting the company’s operational results and cash flow.
In addition, economic challenges also cause Bruker to face increased pricing and cost pressure for its products and services, potentially impacting its operating margins and profitability. In the fourth quarter of 2023, the company’s cost of revenues increased 23.9% year over year, causing the gross margin to fall by 129 basis points.
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 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 2024 earnings per share (EPS) has moved 0.4% north to $2.74 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $3.27 billion. This suggests a 10.3% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Cardinal Health CAH, Stryker SYK and DaVita DVA.
Cardinal Health has a long-term estimated earnings growth rate of 14.2% compared with the industry’s 10.8%. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 15.64%. Its shares have increased 50.8% compared with the industry’s 3.1% rise in the past year.
CAH sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stryker, carrying a Zacks Rank #2 (Buy) at present, has an earnings yield of 3.36% against the industry’s -0.96%. Shares of the company have increased 33.1% compared with the industry’s 5.8% rise over the past year.
SYK’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 5.09%. In the last reported quarter, it delivered an average earnings surprise of 5.81%.
DaVita, sporting a Zacks Rank #1 at present, has an estimated long-term earnings growth rate of 12.1% compared with the industry’s 11.3%. Shares of DVA have rallied 56.7% compared with the industry’s 18.9% rise over the past year.
DVA’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 35.57%. In the last reported quarter, it delivered an average earnings surprise of 22.2%.
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