Bruker (BRKR) Stock Rises On Strong Preliminary Q4 Show

Bruker Corporation (NASDAQ:BRKR) released strong preliminary fourth-quarter and full-year 2019 top line results on Feb 18, 2020. Following the announcement, the stock rallied 1.5% to close at $49.99 yesterday.

The company’s final earnings announcement is still pending due to an income tax related internal investigation.

Preliminary Revenues in Detail

Per the announcement, Bruker’s fourth-quarter preliminary revenues are expected to be $599.9 million, indicating 8.4% growth year over year. The Zacks Consensus Estimate is currently pegged lower at $574.5 million.

The company anticipates organic revenue growth of 5.2% and 4.3% growth from acquisitions (9.5% growth at constant exchange rate or CER) in the fourth quarter. The top line is likely to be adversely impacted by 1.1% due to foreign currency translation.

Full-year preliminary revenues are likely to be $2.07 billion, indicating a 9.3% increase from the year-ago period. The Zacks Consensus Estimate is currently pegged lower at $2.05 billion. For the full year, the company expects organic revenue growth of 5.7% and 6.3% growth from acquisitions leading to a total of 12% growth at CER. Foreign currency translation is expected to have an adverse impact of 2.7% on total revenues.

Geographically, the United States is likely to register 5.9% growth in the reported quarter, while revenues in the Asia Pacific are anticipated to grow by 22.4%. Meanwhile, in the Other category, revenues are projected to increase 11.9%. However, Europe revenues might decline 0.4% year over year.

Segments in Detail

In the fourth quarter, the company’s Bruker Scientific Instruments (BSI) segment preliminary revenues are projected to be $546.6 million, suggesting an improvement of 9.2% from the year-ago quarter, including organic growth of 5.8%. The Bruker Energy & Supercon Technologies (BEST) segment revenues are likely to be $57.7 million, indicating an improvement of 3.8% year over year. However, organically, the BEST segment might decline by 0.5% year over year, net of intercompany eliminations.

Bruker’s BioSpin Group preliminary revenues are anticipated to grow 10.6% from the year-ago quarter to $199 million. Revenues in the NANO group might rise by 2.6% to $171 million whereas CALID revenues are likely to be up by 14.7% year over year to reach $176.6 million.

Margin Trend

Per the company, adjusted gross margin for the quarter is projected to be 50.9%, contracting 10 basis points (bps) year over year. Additionally, adjusted operating margin is estimated at 22.1%, contracting by 10 bps.

2020 Guidance

For 2020, Bruker announced preliminary revenues and operating margin outlook. The company projects organic revenue growth of 4-5% and adjusted operating margin expansion of 70-90 bps. This outlook excludes any probable negative impact from the COVID-19 coronavirus outbreak on full year results, as such impact cannot be estimated at present.

Our Take

Going by the preliminary announcement, Bruker is likely to have exited the year with better-than-expected revenues. A year-over-year projected uptrend in quarterly revenues (both organic and at CER) buoys optimism. Geographically, revenue growth is likely to be registered in the United States, Asia Pacific and Other.

The company’s acquisition activities also raise optimism. Further, we are upbeat about its current focus on product development through higher R&D investment. Additionally, the improvement in gross profit and operating margins buoys optimism.

However, the anticipated adverse foreign exchange impacts, dent in Europe revenues and fall in the company’s BEST segment’s organic revenues are concerning.

Zacks Rank & Key Picks

Bruker currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks, which reported solid results this earnings season, are Stryker Corporation (NYSE:SYK) , STERIS plc (NYSE:STE) and ResMed Inc. (NYSE:RMD) .

Stryker delivered fourth-quarter 2019 adjusted EPS of $2.49, outpacing the Zacks Consensus Estimate by 1.2%. Its fourth-quarter revenues of $4.13 billion surpassed the consensus estimate by 0.7%. The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

STERIS reported third-quarter fiscal 2020 adjusted EPS of $1.45, outpacing the Zacks Consensus Estimate by 1.4%. Net revenues of $774.3 million outpaced the consensus estimate by 3.3%. The company carries a Zacks Rank #2 at present.

ResMed currently has a Zacks Rank #2. It reported second-quarter fiscal 2020 adjusted EPS of $1.21, surpassing the Zacks Consensus Estimate by 19.8%. Its revenues of $736.2 million outpaced the consensus mark by 1.5%.

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