On Sep 7, we issued an updated research report on Bruker Corporation (BRKR - Free Report) . The company’s recent acquisition and collaborations are a strategic fit. However, currency fluctuations remain a drag. The stock carries a Zacks Rank #3 (Hold).
Over the past six months, Bruker has underperformed the industry it belongs to. The stock has lost 1.7% against the industry’s 24.5% rise.
Despite Bruker ending the second quarter with better-than-expected earnings, the year-over-year decline in revenues across all reporting segments as well as major geographies due to coronavirus-led business disruptions is concerning. Contraction of both margins is discouraging as well. The company’s inability to provide any financial guidance also raises apprehensions. Further, the expectation of a negative year-over-year impact of the pandemic on third-quarter results is deterring.
The company’s exposure to foreign exchange fluctuations is a cause of concern as it conducts the majority of its business in international markets. Further, a competitive landscape and macroeconomic woes, stemming from the coronavirus pandemic, pose challenges.
On a positive note, Bruker has been making notable efforts to combat the coronavirus crisis. In Bremen, the company’s Germany campus, Bruker is currently offering a pilot COVID-19 at work testing program for its factory workforce. The program, implemented in April, offers weekly company-paid voluntary COVID-19 PCR tests to employees in the factory.
Further, the company is providing critical technologies and solutions to help fight the crisis. The microbiology and infectious disease diagnostics portfolio has added a SARS-CoV-2 PCR test and the NMR and mass spec systems, which are used in critical disease, therapeutic and vaccine research.
Bruker entered into a distribution agreement with Primer Design from UK, a subsidiary of Novacyt SA, in March. Per the agreement, Bruker-Hain Diagnostics will distribute the CE-IVD-labeled genesig real-time PCR coronavirus (COVID-2019) assay, effective immediately. In this respect, Bruker has been ramping up Bruker-Hain deliveries of nucleic acid extraction kits and COVID-19 PCR test kits to customers in Europe and Africa.
Bruker, in July, launched its FluoroType SARS-CoV-2 plus next-generation 6-plex PCR assay for higher specific detection of the SARS-CoV-2 virus, which causes COVID-19. Notably, the assay has already received the CE Mark and is available on the Bruker Hain FluoroCycler XT real-time PCR system as well as on other commonly available thermocyclers.
Bruker’s Nano Group has been a solid performer till the pandemic hit the market. Despite its disappointing performance in the second quarter due to temporary factory closures being one of the reasons, the segment holds the potential of a rebound. The stores have started reopening since May-end. Semiconductor metrology revenues have been steady year over year, with order rates improving, courtesy of a rebound in the semi metrology equipment markets.
Some better-ranked stocks from the broader medical space include Hologic, Inc. (HOLX - Free Report) , Thermo Fisher Scientific Inc. (TMO - Free Report) and Globus Medical, Inc. (GMED - Free Report) .
Hologic’s long-term earnings growth rate is estimated at 15.5%. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Thermo Fisher’s long-term earnings growth rate is estimated at 15%. It currently carries a Zacks Rank #2 (Buy).
Globus Medical’s long-term earnings growth rate is estimated at 13%. The company presently carries a Zacks Rank #2.
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