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Bruker Poised on Buyouts & Innovations amid Several Woes

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On Sep 28, 2016, we issued an updated research report on Billerica, MA-based Bruker Corporation (BRKR - Free Report) , a designer and manufacturer of proprietary life science and materials research systems and associated products. The company currently carries a Zacks Rank #3 (Hold).

Despite significant revenue decline organically in the last reported second-quarter 2016, we are encouraged by a comparatively better performance by the BioSpin group, optics and semiconductor metrology businesses.

Within BioSpin, during the first half of 2016, Bruker witnessed high demand for the NMR food screener and NMR clinical metabolomics research systems, as well as the new service and aftermarket offering called LabScape. The company also noted growing demand for the latest version of its cost-effective NMR wine screener module used to conduct comprehensive screening of high-value wine.

The company is progressing well with Preclinical imaging (PCI) too. Currently, Bruker offers advanced PCI solutions for a broad spectrum of application fields, such as cancer research, functional and anatomical neuroimaging, orthopedics, cardiac imaging and stroke models. Moreover, this division is experiencing rising customer demand for higher-strength pre-clinical magnetic resonance imaging (MRI) system.

Over the recent past, Bruker has pursued a number of strategies to improve its financial performance. These include the implementation of various productivity improvement initiatives at both BSI and BEST in an effort to streamline its operations. In the first half of 2016, Bruker closed its BioSpinRheinstetten manufacturing facility, which helped lower expenses and drive profitability. We believe all these initiatives will benefit the company’s future operating results.

Apart from this, we are also looking forward to the company’s MALDI PharmaPulse label-free ultra-high throughput screening platform for direct discovery on Rapiflex mass-spec system, which should fetch good orders by pharma companies in the second half of the year.

Additionally, the company's recent decision to acquire Oncovision’s preclinical PET imaging business is expected to be a strategic upside. We note that Oncovision is a leading provider of innovative medical imaging devices and applications for cancer diagnosis.

On the flip side, currency fluctuations continue to remain a drag on Bruker’s overall financial performance. The company’s weak cash balance as well as continued softness in NANO Group disappoints us. Competitive headwinds also continue to pose threats.

 Key Picks from the Sector

Some top-ranked medical stocks are Align Technology Inc. (ALGN - Free Report) , Derma Sciences Inc. and Antares Pharma Inc. . All the three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Align Technology has gained 42.4% year to date, much better than the S&P 500’s 6.1% over the same period. Over the past two months, the company has seen two estimates move higher for the current fiscal, compared to no downward movement. Accordingly, earnings estimates for the year have moved up by 0.9% to $2.28 per share over the last 60 days.

Derma Sciences’ current-year earnings growth rate is 94.5%, much higher than the industry’s 7.9%. The stock recorded a gain of 4.9% over the past one year.

Antares Pharma has an impressive earnings growth rate of 42.2% for the next fiscal, way ahead of the industry growth expectation of 13.5%. Year to date, the stock has performed better than the S&P 500, with a gain of 38.8%.

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