On Jul 7, we issued an updated research report on Radnor, PA-based VWR Corporation . The company offers laboratory products, services and solutions, and currently carries a Zacks Rank #2 (Buy).

VWR had a remarkable start to 2016 and we expect this trend to continue for the rest of the year based on strong sales in both Americas and the EMEA-APAC region, along with growth in equipment and instrumentation.

Per management, robust growth in biotech, medical devices and sales to CRO customers drove the better-than-expected performance of the biopharma business in the Americas during the first quarter of 2016. Moreover, the strategic shift from the company’s North American regional go-to-market strategy to a customer segment-specific approach has started adding value. VWR expects to witness continued solid business momentum in the Americas segment in the second quarter as well.

In the EMEA-APAC region, the company witnessed reduced impact from currency translation on segment sales in the first quarter, which in turn significantly boosted its performance. From a product perspective, sales of chemicals grew in the low single digits, consumables rose in the mid single digits while capital goods increased in the low single digits.

The company’s stable cash balance position as well as its huge customer base added to the optimism.

On the flip side, VWR continues to face gross margin pressure. Escalating cost of production has been a major factor behind this lackluster outcome. Moreover, as the company offers products from a wide range of suppliers, its ability to sustain its gross margin has been, and will continue to be, dependent partly upon its ability to obtain favorable terms from its suppliers.

Unfavorable currency fluctuation continued to impact the company’s overall sales in the first quarter and management expects no respite from the same in the near term. Intensifying competition is also a headwind for the stock.

Key Picks in the Sector

Some better-ranked stocks from the same sector are The Cooper Companies Inc. (COO Quick QuoteCOO - Free Report) , CR Bard Inc. and Laboratory Corp. of America Holdings (LH Quick QuoteLH - Free Report) . All three stocks hold a Zacks Rank #2.

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