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Waltham, MA-based PerkinElmer Inc , a worldwide provider of products, services and solutions to the diagnostics, research, and laboratory service markets, reported fourth-quarter 2016 earnings of 83 cents per share.
Despite having a streak of positive earnings surprises in the last three quarters with an average beat of 4.8%, adjusted earnings missed the Zacks Consensus Estimate of 86 cents in the fourth quarter. Furthermore, the figure missed management’s guided range of 85 cents to 87 cents and declined almost 3.5% on a year-over-year basis.
The company reported adjusted revenues of $567.0 million, which lagged the Zacks Consensus Estimate of $613 million. In fact, revenues were below management’s guided range of $610–$620 million.
For the full year, the company reported adjusted earnings of $2.60 per share, up 11.6% on a year-over-year basis. Adjusted revenue for the full year was $2.12 billion, up 2% organically.
Stock Performance
The price performance of the stock has been quite unfavorable over the last three months.
PerkinElmer added 7.3%, marginally lower than the Zacks classified Instruments – Scientific sub-industry’s gain of almost 8.7%. In fact, the current level is also lower than the S&P 500’s return of 8.7% over the same time frame. The stock has a Zacks Rank #4 (Sell).
On a positive note, a long-term expected earnings growth rate of 11% instills confidence in the stock.
Segment Details
Discovery & Analytical Solutions (DAS): Revenues totaled $409.9 million in the fourth quarter compared with $418.2 million in the year-ago quarter. This marked a 1% decline organically.
For the full year, the segment’s revenues inched down 1% on a reported basis. Revenues grossed $1,513.0 million, marginally down from $1,528.4 million in 2015.
Meanwhile, operating profit margin (as a percentage of revenues) in the fourth quarter was 20.8%, a little above the prior-year quarter’s level of 20.7%.
Furthermore, the company reported adjusted operating profit margin of 17.6% for the full year at the segment, above the year-ago figure of 16.2%.
Diagnostics Segment: In this segment, revenues were $156.8 million in the fourth quarter, as compared with $151.7 million in the year-ago quarter. This marked a 7% increase organically.
For the full year, the segment’s revenues rose 8% organically. Notably, revenues at the segment totaled $602.5 million, much higher than $576.4 million in 2015.
Meanwhile, operating profit margin (as a percentage of revenues) for the segment in the fourth quarter was 29.1%, flat on a year-over-year basis.
Furthermore, the company reported adjusted operating profit margin of 29% for the full year for the segment, above the year-ago figure of 27.9%.
Margin Details
Adjusted gross margin, as a percentage of revenues, was 50% in the quarter, up 90 basis points (bps) year over year, driven by successful cost-cutting (Lean) initiatives, productivity improvements and favorable product mix.
Adjusted selling, general & administrative (SG&A) expenses, as a percentage of revenues, were 23%, down 80 bps from the year-ago quarter owing to the success of the company’s strategic initiatives.
Research and Development (R&D) expenses, as a percentage of revenues, rose 120 bps in the quarter to $32.9 million, thanks to incremental investments in product development and the ongoing investments in Vanadis Diagnostics. Notably, PerkinElmer completed the acquisition of the Sweden-based organization in Jan 2016.
As a result, the company’s overall adjusted operating margin from continuing operations increased by 60 bps.
Financial Details
For the full year, PerkinElmer’s operating cash flow from continuing operations was $323.8 million, compared with $263.8 million in the prior year.
Guidance
For full-year 2017, PerkinElmer expects adjusted earnings per share in the band of $2.75 to $2.85. This represents growth of approximately 8% to 12% at constant currency (cc). Revenues for the full year are expected in the band of $2.19 billion to $2.2 billion. Notably, this marks growth of 4% organically and includes an approximate $40 million impact of foreign exchange headwinds. The revenue forecast also represents a $30 million-headwind related to the company’s recent acquisition of Tulip, an India-based diagnostics company (read more: PerkinElmer to Acquire India-Based Tulip Diagnostics).
For the first quarter of 2017, management expects revenues in the band of $500 million to $510 million, which marks organic revenue growth of 2% to 3%. The first quarter of 2017 adjusted earnings per share are expected in the range of 52 cents to 54 cents.
Our Take
PerkinElmer offers a global diagnostics portfolio focused on: reproductive health, infectious disease screening and genomics offerings for oncology and other molecular tests.
Despite having a solid portfolio, unfavorable foreign exchange and a sluggish European macro environment are primary concerns for PerkinElmer in our view.
Stocks to Consider
Better-ranked stocks in the broader medical sector include Envision Healthcare Corporation , Avinger, Inc. (AVGR - Free Report) and Inogen, Inc (INGN - Free Report) . Notably, Inogen sports a Zacks Rank #1 (Strong Buy) while Envision Healthcare and Avinger carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Inogen has a long-term expected earnings growth rate of approximately 17.5%. Notably, the stock represents an impressive one-year return of 95.5%.
Envision Healthcare has a long-term expected earnings growth rate of approximately 13.6%. Notably, the stock represents an impressive one-year return of 224.7%.
Avinger projects sales growth of 2.3% for the current year. Additionally, the company posted a positive earnings surprise of 27% in the last quarter.
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PerkinElmer (PKI) Misses Q4 Earnings & Revenue Estimates
Waltham, MA-based PerkinElmer Inc , a worldwide provider of products, services and solutions to the diagnostics, research, and laboratory service markets, reported fourth-quarter 2016 earnings of 83 cents per share.
Despite having a streak of positive earnings surprises in the last three quarters with an average beat of 4.8%, adjusted earnings missed the Zacks Consensus Estimate of 86 cents in the fourth quarter. Furthermore, the figure missed management’s guided range of 85 cents to 87 cents and declined almost 3.5% on a year-over-year basis.
The company reported adjusted revenues of $567.0 million, which lagged the Zacks Consensus Estimate of $613 million. In fact, revenues were below management’s guided range of $610–$620 million.
Notably, PerkinElmer announced the divestment of its Medical Imaging business segment to Varian Medical Systems in the reported quarter (Read more: Varian to Acquire PerkinElmer's Medical Imaging Business).
For the full year, the company reported adjusted earnings of $2.60 per share, up 11.6% on a year-over-year basis. Adjusted revenue for the full year was $2.12 billion, up 2% organically.
Stock Performance
The price performance of the stock has been quite unfavorable over the last three months.
PerkinElmer added 7.3%, marginally lower than the Zacks classified Instruments – Scientific sub-industry’s gain of almost 8.7%. In fact, the current level is also lower than the S&P 500’s return of 8.7% over the same time frame. The stock has a Zacks Rank #4 (Sell).
On a positive note, a long-term expected earnings growth rate of 11% instills confidence in the stock.
Segment Details
Discovery & Analytical Solutions (DAS): Revenues totaled $409.9 million in the fourth quarter compared with $418.2 million in the year-ago quarter. This marked a 1% decline organically.
For the full year, the segment’s revenues inched down 1% on a reported basis. Revenues grossed $1,513.0 million, marginally down from $1,528.4 million in 2015.
Meanwhile, operating profit margin (as a percentage of revenues) in the fourth quarter was 20.8%, a little above the prior-year quarter’s level of 20.7%.
Furthermore, the company reported adjusted operating profit margin of 17.6% for the full year at the segment, above the year-ago figure of 16.2%.
Diagnostics Segment: In this segment, revenues were $156.8 million in the fourth quarter, as compared with $151.7 million in the year-ago quarter. This marked a 7% increase organically.
For the full year, the segment’s revenues rose 8% organically. Notably, revenues at the segment totaled $602.5 million, much higher than $576.4 million in 2015.
Meanwhile, operating profit margin (as a percentage of revenues) for the segment in the fourth quarter was 29.1%, flat on a year-over-year basis.
Furthermore, the company reported adjusted operating profit margin of 29% for the full year for the segment, above the year-ago figure of 27.9%.
Margin Details
Adjusted gross margin, as a percentage of revenues, was 50% in the quarter, up 90 basis points (bps) year over year, driven by successful cost-cutting (Lean) initiatives, productivity improvements and favorable product mix.
PerkinElmer, Inc. Price and EPS Surprise
PerkinElmer, Inc. Price and EPS Surprise | PerkinElmer, Inc. Quote
Adjusted selling, general & administrative (SG&A) expenses, as a percentage of revenues, were 23%, down 80 bps from the year-ago quarter owing to the success of the company’s strategic initiatives.
Research and Development (R&D) expenses, as a percentage of revenues, rose 120 bps in the quarter to $32.9 million, thanks to incremental investments in product development and the ongoing investments in Vanadis Diagnostics. Notably, PerkinElmer completed the acquisition of the Sweden-based organization in Jan 2016.
As a result, the company’s overall adjusted operating margin from continuing operations increased by 60 bps.
Financial Details
For the full year, PerkinElmer’s operating cash flow from continuing operations was $323.8 million, compared with $263.8 million in the prior year.
Guidance
For full-year 2017, PerkinElmer expects adjusted earnings per share in the band of $2.75 to $2.85. This represents growth of approximately 8% to 12% at constant currency (cc). Revenues for the full year are expected in the band of $2.19 billion to $2.2 billion. Notably, this marks growth of 4% organically and includes an approximate $40 million impact of foreign exchange headwinds. The revenue forecast also represents a $30 million-headwind related to the company’s recent acquisition of Tulip, an India-based diagnostics company (read more: PerkinElmer to Acquire India-Based Tulip Diagnostics).
For the first quarter of 2017, management expects revenues in the band of $500 million to $510 million, which marks organic revenue growth of 2% to 3%. The first quarter of 2017 adjusted earnings per share are expected in the range of 52 cents to 54 cents.
Our Take
PerkinElmer offers a global diagnostics portfolio focused on: reproductive health, infectious disease screening and genomics offerings for oncology and other molecular tests.
Despite having a solid portfolio, unfavorable foreign exchange and a sluggish European macro environment are primary concerns for PerkinElmer in our view.
Stocks to Consider
Better-ranked stocks in the broader medical sector include Envision Healthcare Corporation , Avinger, Inc. (AVGR - Free Report) and Inogen, Inc (INGN - Free Report) . Notably, Inogen sports a Zacks Rank #1 (Strong Buy) while Envision Healthcare and Avinger carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Inogen has a long-term expected earnings growth rate of approximately 17.5%. Notably, the stock represents an impressive one-year return of 95.5%.
Envision Healthcare has a long-term expected earnings growth rate of approximately 13.6%. Notably, the stock represents an impressive one-year return of 224.7%.
Avinger projects sales growth of 2.3% for the current year. Additionally, the company posted a positive earnings surprise of 27% in the last quarter.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>