On May 16, 2013, we downgraded our recommendation on PerkinElmer Inc. (PKI) to Underperform based on its first quarter earnings results and reduced guidance.
On Apr 25, PerkinElmer announced its results for the reported quarter. The company reported first-quarter adjusted (excluding one-time expenses) earnings per share of 36 cents, missing the Zacks Consensus Estimate of 48 cents and lower than the year-ago earnings per share of 43 cents.
Revenues stood at $505.4 million in the reported quarter, down 1.1% year over year, missing the Zacks Consensus Estimate of $534 million.
PerkinElmer cut guidance for 2013. The company currently forecasts adjusted earnings per share for 2013 in the range of $2.00 to $2.10 (earlier $2.24 to $2.32). Reported earnings per share from continuing operations are forecast in the range of $1.30 to $1.40 (earlier $1.57 to $1.65). Organic revenue is expected to increase in the low-single digit (earlier mid-single digit) range.
While PerkinElmer has made several acquisitions, the strategy has inherent risks and it remains a collection of diverse businesses. Further, restructuring charges are expected to grow in 2013. Also, the overall portfolio strategy remains unclear.
Over the past month, the Zacks Consensus Estimate for 2013 has dipped 6.1% to $2.05. The Zacks Consensus Estimate for 2014 has gone down 8.1% over the same timeframe.
The stock carries a Zacks Rank #5 (Strong Sell). We are more optimistic about Becton, Dickinson and Company (BDX) and HeartWare International Inc. (HTWR) each of which carries a Zacks Rank #2 (Buy) and is expected to do well. In addition, Conceptus, Inc. (CPTS) carries a Zacks Rank #1 (Strong Buy) and warrants a look.
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