Here's Why You Should Retain Bruker (BRKR) Stock for Now
Bruker Corporation BRKR is well-poised for growth in the coming quarters due to the strong performance of the Bruker CALID and NANO groups. Bruker’s announcement to acquire PhenomeX is a significant step in functional single-cell biology research solutions.
However, the company’s operations are exposed to intense competition from its peers in the industry. Mounting expenses weighing on the margin are also concerning for Bruker.
In the past year, this Zacks Rank #3 (Hold) stock has increased 10.1% against the 18.9% fall of the industry and an 11.6% rise of the S&P 500 composite.
The renowned medical device company has a market capitalization of $10.14 billion. Bruker projects a long-term estimated earnings growth rate of 18.5% compared with 11.6% of the industry. BRKR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 11.96%.
Let’s delve deeper.
Upsides
CALID Group Holds Potential: Bruker’s CALID Group has been progressing due to strong growth in the life science mass spectrometry business. The timsTOF platform continues to witness the robust demand for applications in 4Dproteomics, anti-proteomics and metabolomics and more.
In addition, BRKR launched the timsTOF Ultra in the second quarter, which provides market-leading sensitivity and throughput with expanded peptide coverage and more accurate quantitation in unbiased 4D single-cell line and tissue proteomics.
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BSI NANO Group’s Prospects Appear Bright: Bruker’s NANO Group continues to witness strong growth across its end markets, including academic and government, industrial and semiconductor metrology. Product innovation and research demand are driving Life Science fluorescence microscopy revenues, along with a strong contribution from the recently acquired Inscopix neuroscience research tools.
Throughout the first half of 2023, revenues from advanced X-ray and Nano surface tools delivered strong growth.
Acquisitions to Add Value: The recent announcement to acquire PhenomeX marks Bruker’s entry into functional single-cell biology research solutions. This complements the company’s emerging spatial biology business in support of the transformational Project Accelerate 2.0 strategy.
Earlier in May 2023, BRKR closed the acquisition of ZONTAL Inc., which bolsters Bruker BioSpin’s Integrated Data Solutions software division. The combined efforts of both companies aim to provide an exceptional offering for the vendor-agnostic digital laboratory and biopharmaceutical process transformation, as well as grow strong partnerships with today's customers.
Downsides
A Competitive Landscape: Bruker faces substantial competition in a consolidating industry and expects competition across its markets to increase further. Bruker BioSpin competes with companies that offer magnetic resonance spectrometers, mainly JEOL and Oxford Instruments. In the field of preclinical imaging, Bruker BioSpin faces a competitive threat from Perkin Elmer, Visualsonics (Fuji Film) and others.
Unfortunately, many 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.
Margin Performance: Similar to its peers in the industry, Bruker also faces the inflationary pressures of supply-chain challenges, increased expenses and adverse currency impacts. In the second quarter of 2023, the company reported a 125-basis point contraction in the adjusted operating margin due to a lower gross margin, an unfavorable product mix, continuing investments in select Project Accelerate 2.0 initiatives and the impact of the recent acquisitions and foreign exchange headwinds.
Estimate Trend
The Zacks Consensus Estimate for Bruker’s 2023 earnings per share (EPS) has remained constant at $2.57 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $2.88 billion. This suggests a 13.97% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Align Technologies ALGN, SiBone SIBN and Quanterix QTRX.
Align Technologies has a long-term estimated earnings growth rate of 17.5% compared with the industry’s 12.3%. ALGN’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed in one, the average negative surprise being 1.76%. Its shares have rallied 32.7% compared with the industry’s 7.9% rise in the past year.
ALGN carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
SiBone, carrying a Zacks Rank #2 at present, has a long-term estimated earnings growth rate of 22.9% compared with the industry’s 16.5%. Shares of the company have rallied 23.4% compared with the industry’s 4.8% growth over the past year.
SIBN’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 20.37%.
Quanterix, carrying a Zacks Rank #2 at present, has an estimated earnings growth rate of 62.8% for the current year compared with the industry’s 15.2%. Shares of QTRX have surged 170.8% against the industry’s 4.8% decline over the past year.
Quanterix’s earnings surpassed estimates in each of the trailing four quarters, delivering an average earnings surprise of 30.39%. In the last reported quarter, it posted an earnings surprise of 55.56%.
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