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PerkinElmer, Inc. (PKI)

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We upgrade our rating for PerkinElmer, Inc. (PKI) to Outperform based on solid results and benefits from reorganization. First-quarter 2011 earnings per share of $0.34 surpassed the Zacks Consensus Estimate of $0.30. PerkinElmer is a leader in several life science segments. It has added new related areas as part of its reorganization and divested unrelated businesses. As a consequence, it has emerged as a higher-growth, higher-margin company.

Its operations, both sales and manufacturing, are diversified on a geographic basis. The company has implemented cost containment measures. Growing recurring revenue stream and operating margin expansion are its pillars of strength.

Based on the company's recent performance, we upgrade our rating on the stock to Outperform with a price target of $31, which is based on a P/E of approximately 18.6X our fiscal 2011 EPS estimate.

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