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PerkinElmer: Human Health and Environmental Sales a Drag

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On Nov 18, we issued an updated research report on Waltham, MA-based PerkinElmer, Inc. – a leading global provider of scientific instruments, consumables, and services to pharmaceutical, biomedical and environmental testing markets. The company currently carries a Zacks Rank #4 (Sell).

Over the last 30 days, the Zacks Consensus Estimate for full-year 2016 earnings fell by 4 cents to $2.76 per share. The stock recorded an earnings surprise of 3.03% in the last reported quarter and has a long-term expected earnings growth rate of almost 11.3%.

PerkinElmer ended the third quarter on a mixed note wherein adjusted earnings surpassed management’s guided range and the Zacks Consensus Estimate. However, revenues lagged the guided range and also deteriorated on a year-over-year basis.

Human Health and Environmental revenues declined massively on a year-over-year basis in the just-reported quarter, due to softer capital equipment end-markets. Additionally, lower-than-estimated sales in the U.S. and Europe caused a drag on Environmental sales.

The decline in sales at the Medical Imaging segment raises concern. PerkinElmer faced significant headwinds in the radiochemical and capital-intensive businesses as well.

Additionally, management’s decision to eliminate certain slower growth segments from the priority list has marred the short-term prospects for PerkinElmer.

We believe a sluggish European macro-economic environment and restrained spending and challenges in Japan are also likely to hurt the top line in the near term.

Nevertheless, with an enhanced focus on product innovation and expansion into emerging markets like China, PerkinElmer holds considerable promise for the coming quarters.

Key Picks

Better-ranked stocks in the broader medical space include Cogentix Medical, Inc. (CGNT - Free Report) , CryoLife Inc. and IDEXX Laboratories, Inc. (IDXX - Free Report) . Notably, IDEXX Laboratories and Cogentix sport a Zacks Rank #1 (Strong Buy) while CryoLife has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cogentix Medical registered a positive earnings surprise of 100% in the last reported quarter. Notably, the company has a solid one-year return of roughly 73.7%.

CryoLife has a stellar one-year return of roughly 90.7%. In the last reported quarter, the company registered an impressive earnings surprise of 225%.

IDEXX Laboratories represents a solid one-year return of almost 67.8%. The company has a long-term expected growth rate of roughly 14.96%.

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