Bruker (BRKR) Q1 Earnings Beat Estimates, Guidance Upbeat

Bruker Corporation (NASDAQ:BRKR) delivered adjusted earnings per share (EPS) of 28 cents in the first quarter of 2019, up 16.7% from the year-ago figure as well as the Zacks Consensus Estimate.

On a reported basis, earnings were 20 cents a share compared with the year-earlier figure of 17 cents.

Revenues in Detail

Bruker registered revenues of $461.4 million in the first quarter, up 6.9% year over year. The top line also surpassed the Zacks Consensus Estimate by 1.4%.

Excluding a positive effect of 6% from acquisitions and a 4.6% negative impact from changes in foreign currency rates, Bruker generated higher organic revenues of 5.5% year over year.

The company’s organic revenue growth was driven by strength in Bruker Scientific Instruments (BSI) and BEST segments.

Geographically, the United States saw 12.2% growth in the reported quarter. Meanwhile, European revenues dipped 3.9% year over year. Also, Asia Pacific revenues slipped 19.9%. In Other category, revenues declined 5.4%.

Bruker’s BioSpin Group revenues slid 3% below the year-ago quarter’s level as during this period, some orders and installations were shifted to future periods. Revenues in the NANO group rose 13.6%, fueled by a strong uptrend in the academic research and industrial research markets. CALID revenues were up 12.9% year over year.

Margin Trend

Gross margin in the quarter under review expanded 34 basis points (bps) to 46.5%. While selling, general & administrative expenses climbed 8.9% to $120.1 million. Research and development expenses went up 7.4% year over year to $46.4 million. Overall, adjusted operating margin contracted 19 bps to 10.4%.

Financial Position

Bruker exited the first quarter of 2019 with cash and cash equivalents of $298.8 million, down from $322.4 million at the end of 2018. Year-to-date operating cash flow was $14.2 million in comparison to $43.8 million in the year-ago period.

2019 Guidance

Bruker has raised its 2019 outlook. For the full year, the company currently projects approximately 7-8% revenue growth (earlier forecast was 6-7% increase) including nearly 4.5-5.5% organic revenue rise (past expectation was 4-5% rise) and an estimated 2.5% headwind (previous prediction was 2%) from adverse foreign currency translation. The company envisions a year-over-year expansion of 90-120 bps (earlier view was 70-100 bps) in adjusted operating margin.

For 2019, Bruker anticipates its adjusted EPS view in the range of $1.57-$1.61 (earlier band was $1.54-$1.58), up 12-15% from the prior-year’s figure. The Zacks Consensus Estimate of $1.60 remains within this guided range.

Our Take

Bruker ended the first quarter on a positive note with both earnings and revenues staying ahead of the consensus mark. A strong year-over-year uptrend in organic revenues was encouraging. Additionally, this improvement in gross and operating margins buoys optimism on the stock. The company’s strategic acquisition activity has also been impressive. Further, we are upbeat about its current focus on product development through higher R&D investment.

On the flip side, a competitive landscape and macroeconomic woes pose persistent challenges to the company.

Zacks Rank & Other Key Picks

Bruker carries a Zacks Rank #2 (Buy). A few other top-ranked medical stocks flaunting solid results this earnings season are Stryker Corp. (NYSE:SYK) , Abbott Laboratories (NYSE:ABT) and CONMED Corp. (NASDAQ:CNMD) , each carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stryker delivered first-quarter 2019 adjusted EPS of $1.88, beating the Zacks Consensus Estimate by 2.2%. Meanwhile, revenues of $3.52 billion came in line with the consensus estimate.

Abbott reported first-quarter 2019 adjusted EPS of 63 cents, topping the Zacks Consensus Estimate by 3.3%. Moreover, worldwide sales of $7.54 billion trumped the consensus estimate of $7.47 billion.

CONMED posted first-quarter 2019 adjusted EPS of 57 cents, which exceeded the Zacks Consensus Estimate of 54 cents. Also, revenues of $218.4 million outpaced the consensus mark of $213 million.

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