Bruker Corporation
BRKR
is gaining strength across the BSI and BEST businesses. The strong bookings and backlog growth during the fourth quarter buoy optimism. The ongoing rebound in businesses within the Nano Group also seems encouraging. The company’s growing investments in Project Accelerate 2.0 initiatives are an added advantage.
The renowned medical device company and currently a Zacks Rank #2 (Buy) stock has a market capitalization of $10.67 billion. The company surpassed earnings estimates in the trailing three months and met estimates on one occasion, the average surprise being 21.9%.
Over the past five years, the company has gained 13.7%, ahead of the S&P 500’s 2.8% increase. The long-term expected growth rate is estimated at 18.6%, compared with the S&P 500’s estimated 11.2% growth.
Let’s delve deeper.
Factors at Play
Q4 Upsides:
Bruker ended the fourth quarter of 2021 with better-than-expected revenues. The top line was driven by robust revenue growth across all geographies as well as revenue growth across the BSI and BEST businesses. The company delivered robust bookings and backlog growth in the fourth quarter, buoying optimism. The company has also increased its investments in Project Accelerate 2.0 initiatives and operational excellence drive, focusing on key opportunities in proteomics and spatial biology. Bruker’s financial outlook for 2022, with solid growth projections over 2021, instills investors’ confidence. A strong solvency position is an added advantage.
BSI Nano Group Grows:
Bruker’s Nano Group microelectronics and semiconductor metrology tools continue to perform well on ongoing strength in bookings and backlog. For full-year 2021, the company witnessed a solid rebound in businesses within the Nano Group. Revenues from advanced X-ray, Nano Surfaces and Nano Analysis tools saw considerable growth in 2021 compared to 2020. Nano Group’s 2021 revenues also included revenue contributions from the prior acquisition of Canopy Biosciences, Spatial biology, targeted Proteomics tools and CRO services.
CALID Group Holds Potential:
Bruker’s CALID Group has been making decent progress of late. In the fourth quarter, the business recorded an improvement of 14.5% year over year, primarily resulting from strong performance in life science mass spectrometry and the MALDI Biotyper franchise. For full-year 2021, CALID Group revenues increased in the low-20s percentage with continued growth in mass spectrometry and microbiology businesses along with strength in the FT-IR/NIR/Raman molecular spectroscopy product line. The robust revenue growth in the timsTOF unbiased 40 proteomics and multiomics platform during 2021 also raises optimism.
Potential of PCI Market:
Bruker offers advanced preclinical imaging (PCI) solutions for a broad spectrum of application fields, such as cancer research, functional and anatomical neuroimaging, orthopedics, cardiac imaging and stroke models. During the fourth quarter, BioSpin’s PCI division acquired MOLECUBES — a dynamic innovator in benchtop preclinical nuclear molecular imaging (NMI) systems. This buyout strengthens the company’s position as a leading NMI solutions provider in preclinical and translational imaging research. Further, solid prospects in the global PCI market offer a significant opportunity for Bruker to strengthen its market position and earn higher profits from this division, going ahead.
Downsides
Escalating Expenses:
In the fourth quarter of 2021, Bruker’s selling, general & administrative expenses rose 17.6%, whereas research and development expenses increased 1.8% year over year. The rise in operating expenses resulted in a 95-basis point contraction in operating margin, building pressure on the bottom line.
Exposure to Currency Movement:
Since Bruker conducts 80% of its business in international markets, unfavorable currency movements continue to lead to foreign currency transaction losses at the company. In addition, currency fluctuations could cause the price of Bruker’s products to be less competitive than its principal competitors’ offerings.
Over the past year, Bruker has lost 3.7% against 11% growth of the
industry
and 11.8% rise of the S&P 500 composite.
Estimate Trend
Bruker has been witnessing a positive estimate revision trend for 2022. Over the past 60 days, the Zacks Consensus Estimate for Bruker’s 2022 earnings has moved 1.3% north to $2.31.
The Zacks Consensus Estimate for its 2022 revenues is pegged at $2.56 billion, suggesting a 6% rise from the year-ago reported number.
Key Picks
A few other top-ranked stocks in the broader medical space are
AMN Healthcare Services, Inc.
AMN
,
Henry Schein, Inc.
HSIC
and
McKesson Corporation
MCK
.
AMN Healthcare has a long-term earnings growth rate of 16.2%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 19.5%, on average. It currently sports a Zacks Rank #1 (Strong Buy). You can see
the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has outperformed its industry in the past year. AMN has gained 41.3% versus the 53.5% industry decline.
Henry Schein has an estimated long-term growth rate of 11.8%. Henry Schein’s earnings surpassed estimates in the trailing four quarters, the average surprise being 25.5%. It currently has a Zacks Rank #2.
Henry Schein has outperformed the industry over the past year. HSIC has gained 27% compared with the industry’s 11% rise over the past year.
McKesson has a long-term earnings growth rate of 11.8%. McKesson’s earnings surpassed estimates in the trailing four quarters, delivering a surprise of 20.6%, on average. It presently carries a Zacks Rank #2.
McKesson has outperformed the industry over the past year. MCK has gained 58.1% in the said period compared with 10.9% growth of the industry.
Just Released: Zacks Top 10 Stocks for 2022
In addition to the investment ideas discussed above, would you like to know about our 10 top buy-and-hold tickers for the entirety of 2022?
Last year’s 2021
Zacks Top 10 Stocks
portfolio returned gains as high as +147.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys
Access Zacks Top 10 Stocks for 2022 today >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
