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PerkinElmer (PKI) Q1 Earnings and Revenues Surpass Estimates

Zacks Equity Research

PerkinElmer, Inc. PKI reported first-quarter 2020 adjusted earnings per share (EPS) of 67 cents, which beat the Zacks Consensus Estimate of 47 cents per share by 42.6%. However, the bottom line declined 2.9% from the year-ago quarter.

Based in Waltham, MA, this leading MedTech company reported revenues of $652.4 million, up 0.6% from the year-ago quarter but fell 1% organically. Adjusted revenues in the reported quarter came in at $652.6 million, 0.6% year over year. The top line also surpassed the Zacks Consensus Estimate by 1.8%.

Segment Details

Discover & Analytics Solutions

At this segment, revenues totaled $398.4 million, reflecting an improvement of 2.5% from the year-ago quarter. Organically, the segment saw a decline of 1% in the quarter under review. Per management, continued strength in life sciences was more than offset by weak performance in food and applied markets.

Coming to profits at the DAS segment, the company reported first-quarter 2020 adjusted operating income of $54.4 million, up 0.2% from the year-ago quarter.

Diagnostics segment

Revenues at this segment amounted to $254 million, down 2.3% on a year-over-year basis. Organically, the segment deteriorated 1% in the first quarter. Per management, strength in applied genomics business was noticeably offset by modest decline across reproductive health and immunodiagnostics business lines.

Adjusted operating income in the segment totaled $90.6 million, up 5.6% from the year-ago quarter.

PerkinElmer, Inc. Price, Consensus and EPS Surprise

 

PerkinElmer, Inc. Price, Consensus and EPS Surprise

PerkinElmer, Inc. price-consensus-eps-surprise-chart | PerkinElmer, Inc. Quote

Geographical Details

Per management, the major geographies witnessed a mixed first quarter, with mid-single digit organic revenue growth in the United States. While Europe saw double-digit growth, Asia Pacific (APAC) witnessed a double-digit decline on account of the COVID-19 pandemic in China, which was down over 30%.

Margin Analysis

Adjusted gross profit in the quarter came in at $325.4 million, up 0.7% year over year. Adjusted gross margin, as a percentage of revenues was 49.9%, up 10 bps year over year.

Adjusted operating income was $99.6 million, down 5.3% year over year. Adjusted operating margin, as a percentage of revenues was 15.3%, down 90 bps.

Financial Update

The company exited the first quarter with cash and cash equivalents came in at $195.1 million, increasing 1.7% from the year-end 2019.

During the reported quarter, net cash provided by operating activities came in at $60.1 million, compared with net cash used in operating activities of $5.3 million in the year-ago period.

2020 Guidance

Due to the uncertainty regarding the magnitude and duration of the COVID-19 pandemic, and the scope of a potential customer activity rebound, PerkinElmer has withdrawn its previously issued (Jan 27, 2020) full-year 2020 outlook.

Nonetheless, the company anticipates adjusted earnings per share of at least 65 cents in second-quarter 2020.  Revenues are anticipated between $610 million and $720 million.

Conclusion

PerkinElmer exited the first quarter on a strong note, with both earnings and revenues surpassing their respective consensus marks. The company witnessed modest performance by its core Discover & Analytics Solutions unit in the quarter under review. Modest growth in Europe and United States is also encouraging.

Further, expansion in gross margin buoys optimism. Solid show by Tulip and EUROIMMUN also paints a bright picture.

However, negative currency movements impacted the company’s top line in the quarter under review. Further, Diagnostics segment displayed weak performance in the first quarter. Furthermore, PerkinElmer continues to make acquisitions, which increases integration risks.

Zacks Rank

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

Key Picks

Some better-ranked stocks in the broader medical space are Aphria Inc. APHA, Biogen Inc. BIIB and Eli Lilly and Company LLY.

Aphria reported third-quarter fiscal 2020 adjusted EPS of 2 cents, beating the Zacks Consensus Estimate of a loss of 4 cents. Net revenues of $64.4 million surpassed the consensus mark by 14.6%. The company carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Biogen currently carries a Zacks Rank #2. It reported first-quarter 2020 adjusted EPS of $9.14, surpassing the Zacks Consensus Estimate by 18.1%. Revenues of $3.53 billion outpaced the consensus mark by 3.2%.

Eli Lilly reported first-quarter 2020 EPS of $1.75, outpacing the Zacks Consensus Estimate by 12.9%. Revenues of $145.3 million surpassed the consensus estimate by 6.3%. The company currently sports a Zacks Rank #1.

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