PerkinElmer (PKI) To Report Q4 Earnings: What's In The Cards?

PerkinElmer, Inc. (NYSE:PKI) is slated to release fourth-quarter 2019 results on Jan 27, after the closing bell. In the last reported quarter, the company delivered a positive earnings surprise of 4.9%. Further, it has an average four-quarter positive surprise of 2.6%.

Let’s take a look at how things are shaping up prior to this announcement.

Which Way Are Estimates Treading?

For the quarter to be reported, the Zacks Consensus Estimate for earnings per share is pegged at $1.32, suggesting an improvement of 11.9% from the year-ago quarter. The same for revenues stands at $802 million, indicating growth of 6% from the prior-year reported figure.

Diagnostics Revenues: A Key Catalyst

PerkinElmer's Diagnostics segment is likely to have contributed significantly to its fourth-quarter results. Sustained growth across the company's reproductive health and immunodiagnostics is anticipated to get reflected in the segment’s revenues in the fourth quarter.

Rising demand for early diagnosis and increase in adoption of new technologies has been fueling growth across all three of segments of reproductive health, immunodiagnostics and genomics. This is likely to have benefited the to-be-reported quarter.

Further, the continued rise in infectious and autoimmune diseases, especially in emerging markets, is likely to have aided the segment.

Reflective of these, the Zacks Consensus Estimate for the segment's fourth-quarter revenues stands at $311 million, indicating an improvement 5.1% from the prior-year quarter.

Other Factors at Play

PerkinElmer is likely to have witnessed solid international growth in the to-be-reported quarter. Improved growth momentum in APAC and Europe, and consistent growth trend in the United States is likely to have contributed to the fourth-quarter performance.

Acquisitions and strategic partnerships are likely to get reflected in PerkinElmer’s fourth-quarter performance. In fact, the Cisbio buyout is anticipated to contribute $35 million in revenues to the company in 2019, a trend that is likely to get reflected in the to-be-reported quarter.

Further, the company announced the buyout of Meizheng Group – a leading food safety testing company in China in third-quarter 2019. The acquisition is likely to strengthen PerkinElmer’s food safety abilities in attractive markets, which includes pathogen, toxin and drug residue testing. Per management, Meizheng Group is projected to contribute less than 1% to PerkinElmer revenue growth and negligible EPS accretion in the fourth quarter. Consequently, the positive impacts of the acquisition are likely to get reflected in the fourth-quarter results.

Additionally, the company’s Discovery product portfolio is likely to have seen strong demand on the back of probable robust performance by life sciences.

The company’s bottom line is anticipated to reflect organic revenue growth and better margin expansion. In fact, for the fourth quarter, earnings per share is estimated at $1.32. In terms of revenues, the company projects reported revenues of $800 million in the fourth quarter, representing 5% organic revenue growth.

Productivity initiatives and volume leverage are likely to have contributed to the company’s gross and operating margins in the fourth quarter. New product introductions are likely to have improved product mix and thereby gross margin.

Additionally, the company has been implementing plans to invest in high-growth areas and shift the organization to a more unified structure; this is likely to have aided operating margin expansion in the to-be-reported quarter.

However, PerkinElmer estimates a headwind of $1 million or less in to-be-reported quarter from China. Moreover, the company is likely to have borne the impact of tariffs in the Discovery & Analytical Solutions unit at the high end since the company exports products from the United States to China.

Additionally, PerkinElmer anticipates foreign exchange to affect fourth-quarter 2019 results by approximately $11 million.

Here’s What the Quantitative Model Suggests

Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here as you will see below.

Earnings ESP: PerkinElmer has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: PerkinElmer carries a Zacks Rank #2.

Stocks to Consider

Here are a few medical stocks worth considering as they have the right combination of elements to post an earnings beat this quarter.

Baxter International (NYSE:BAX) has an Earnings ESP of +1.32% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stryker Corporation (NYSE:SYK) has an Earnings ESP of +0.60% and a Zacks Rank #3.

Zimmer Biomet Holdings, Inc. (NYSE:ZBH) has an Earnings ESP of +0.38% and a Zacks Rank #3.

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