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Water Corp.'s Pharma Business Accelerates Growth Momentum
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On Aug 22, we issued an updated research report on Milford, Massachusetts-based Waters Corporation (WAT - Free Report) , an analytical instrument manufacturer which specializes in innovating practical and sustainable products for laboratory-dependent organizations. The company currently carries a Zacks Rank #2 (Buy).
Last month, Waters Corp. added yet another beat to its impressive earnings streak in its second-quarter 2016 earnings report, surpassing the Zacks Consensus Estimate by almost 9%. The company enjoyed broad-based revenue growth across end markets, product lines and geographies, along with streamlined costs which further boosted profitability.
On the back of the striking performance, the Zacks Consensus Estimate increased 3.1% to $6.56 for 2016 and 3.3% to $7.16 for 2017, as estimates have moved north over the last 30 days.
The company’s key growth drivers remain strong momentum across pharmaceutical end markets, along with striking growth in recurring-revenue products. Particularly, the company is seeing remarkable growth in core small molecule QA/QC workflows, as well as in large molecule R&D oriented applications. The industrial sector, driven by TA and Waters products, is also a significant growth driver. The TA division sales contributed to top-line growth on the back of its successful technology offerings and acquired products.
Waters Corp.’s leading position in the high-performance liquid chromatography and mass spectrometry markets remain a major strength that has acted as a strong revenue driver over the past few quarters.
Waters Corp.’s exposure in the pharma/biotech industry is primarily in regulated commercial lab environments, where demand is non-discretionary and not prone to cyclicality. This helps the company mitigate uncertain client spending stemming from macroeconomic volatility. Also, given the fact that liquid chromatography is used in a variety of applications including drug discovery, development, quality control of drug products, therapeutic drug monitoring, proteomics, metabolomics, environmental analysis and food analysis, Waters Corp. stands to benefit significantly from this business going forward.
The company expects these trends to continue in 2016 and drive a 6–7% constant currency sales growth for 2016. Moreover, it has a rich products pipeline with innovative new products that it plans to launch in the quarters ahead.
Its inorganic story also looks impressive. The company recently acquired ElectroForce Group – which specializes in manufacturing mechanical testing systems based on a proprietary electromagnetic motor technology – that continues to supplement growth. Also, the inclusion of Rapid Evaporative Ionization Mass Spectrometry technology in business has been boding well for the company by reducing its dependency on pharmaceuticals and higher-end academic research orders.
Waters Corp.’s liquidity position has been improving, with cash, cash equivalents and investments increasing to around $2.6 billion at the end of second-quarter 2016 from $2.4 billion as on Dec 31, 2015. Also, the company is dedicated toward improving its shareholders’ value through steady dividend payout and share repurchases.
Yet, Waters Corp. remains vulnerable to stiff competition from several instrument manufacturers. Also, its R&D costs could put pressure on margins.
Other Stocks to Consider
Other favorably ranked stocks in the broader computer & technology sector include ViaSat Inc. (VSAT - Free Report) , Motorola Solutions, Inc. (MSI - Free Report) and QUALCOMM Incorporated (QCOM - Free Report) , each holding the same Zacks Rank as Waters Corp.
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Water Corp.'s Pharma Business Accelerates Growth Momentum
On Aug 22, we issued an updated research report on Milford, Massachusetts-based Waters Corporation (WAT - Free Report) , an analytical instrument manufacturer which specializes in innovating practical and sustainable products for laboratory-dependent organizations. The company currently carries a Zacks Rank #2 (Buy).
Last month, Waters Corp. added yet another beat to its impressive earnings streak in its second-quarter 2016 earnings report, surpassing the Zacks Consensus Estimate by almost 9%. The company enjoyed broad-based revenue growth across end markets, product lines and geographies, along with streamlined costs which further boosted profitability.
On the back of the striking performance, the Zacks Consensus Estimate increased 3.1% to $6.56 for 2016 and 3.3% to $7.16 for 2017, as estimates have moved north over the last 30 days.
The company’s key growth drivers remain strong momentum across pharmaceutical end markets, along with striking growth in recurring-revenue products. Particularly, the company is seeing remarkable growth in core small molecule QA/QC workflows, as well as in large molecule R&D oriented applications. The industrial sector, driven by TA and Waters products, is also a significant growth driver. The TA division sales contributed to top-line growth on the back of its successful technology offerings and acquired products.
Waters Corp.’s leading position in the high-performance liquid chromatography and mass spectrometry markets remain a major strength that has acted as a strong revenue driver over the past few quarters.
Waters Corp.’s exposure in the pharma/biotech industry is primarily in regulated commercial lab environments, where demand is non-discretionary and not prone to cyclicality. This helps the company mitigate uncertain client spending stemming from macroeconomic volatility. Also, given the fact that liquid chromatography is used in a variety of applications including drug discovery, development, quality control of drug products, therapeutic drug monitoring, proteomics, metabolomics, environmental analysis and food analysis, Waters Corp. stands to benefit significantly from this business going forward.
The company expects these trends to continue in 2016 and drive a 6–7% constant currency sales growth for 2016. Moreover, it has a rich products pipeline with innovative new products that it plans to launch in the quarters ahead.
WATERS CORP Price and Consensus
WATERS CORP Price and Consensus | WATERS CORP Quote
Its inorganic story also looks impressive. The company recently acquired ElectroForce Group – which specializes in manufacturing mechanical testing systems based on a proprietary electromagnetic motor technology – that continues to supplement growth. Also, the inclusion of Rapid Evaporative Ionization Mass Spectrometry technology in business has been boding well for the company by reducing its dependency on pharmaceuticals and higher-end academic research orders.
Waters Corp.’s liquidity position has been improving, with cash, cash equivalents and investments increasing to around $2.6 billion at the end of second-quarter 2016 from $2.4 billion as on Dec 31, 2015. Also, the company is dedicated toward improving its shareholders’ value through steady dividend payout and share repurchases.
Yet, Waters Corp. remains vulnerable to stiff competition from several instrument manufacturers. Also, its R&D costs could put pressure on margins.
Other Stocks to Consider
Other favorably ranked stocks in the broader computer & technology sector include ViaSat Inc. (VSAT - Free Report) , Motorola Solutions, Inc. (MSI - Free Report) and QUALCOMM Incorporated (QCOM - Free Report) , each holding the same Zacks Rank as Waters Corp.
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 >>