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Bruker (BRKR) Hits a New 52-Week High: What's Driving It?
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Bruker Corporation (BRKR - Free Report) scaled a new 52-week high of $84.92 on Aug 20, before closing the session marginally lower at $84.16. The stock has rallied 2% since its second-quarter earnings announcement on Aug 2.
The company is witnessing an upward trend in its stock price, prompted by revenue growth across the BSI and BEST segments and geographies. Further, the raised 2021 guidance boosted by the solid second-quarter performance instills investors’ confidence in the stock. However, stiff competition and forex woes are concerns.
Let’s delve deeper.
Key Growth Drivers
Impressive Q2 Results: Bruker ended the second quarter of 2021 with better-than-expected results. Revenue growth across the BSI and BEST segments and geographies contributed to the top line. The segment reported robust demand for the company’s high-performance scientific instruments, life science and diagnostic solutions, driven by solid end-market recovery. Strong revenue and volume growth in the quarter substantially drove year-over-year gross and operating margins despite increase in R&D and marketing and sales investments in Project Accelerate 2.0. Geographically, the first-half 2021 order bookings were particularly strong in North America, China and other Asia-Pacific markets outside of Japan.
BSI Nano Group Prospects Bright: We are optimistic about BSI Nano Group performance in the second quarter of 2021. BSI systems’ second-quarter 2021 organic revenue increased in the low-30% range while aftermarket revenues grew in the high-teens organically compared to the second quarter of 2020. Geographically and on an organic basis, European revenues increased in the high-20% range. North American revenues grew more than 50% on a weak prior-year comparison. Asia-Pacific revenues grew in the high single-digits. Softer revenue performance in China and Japan was more than offset by strong revenue growth in other APAC regions. Rest of the world’s second-quarter 2021 revenues also improved year over year.
Image Source: Zacks Investment Research
Raised 2021 Guidance: We are upbeat about Bruker’s raised 2021 financial outlook. The company expects revenue growth of approximately 17-19% compared to May-announced revenue guidance of 14-16%. Organic revenue growth is projected within 14-16%, up from the earlier guided range of 11-13%.
The company expects full-year adjusted earnings per share in the band of $1.88-$1.93, indicating an uptick of 39-43% from the 2020 reported figure (up from the previous expectation of $1.82-$1.87).
Downsides
Exposed to Currency Movement: Bruker conducts 80% of its business in international markets. Thus, currency fluctuations continue to result in foreign currency transaction losses.
Competitive Landscape: Bruker faces substantial competition in a consolidating industry and expects competition in all markets to increase further. Bruker BioSpin competes with companies that offer magnetic resonance spectrometers, mainly JEOL and Oxford Instruments. In the field of preclinical imaging, Bruker BioSpin faces competitive threat from Perkin Elmer, Mediso, Trifoil, MR Solutions, RS2D, Visualsonics (Fuji Film) and others.
Image: Bigstock
Bruker (BRKR) Hits a New 52-Week High: What's Driving It?
Bruker Corporation (BRKR - Free Report) scaled a new 52-week high of $84.92 on Aug 20, before closing the session marginally lower at $84.16. The stock has rallied 2% since its second-quarter earnings announcement on Aug 2.
The company is witnessing an upward trend in its stock price, prompted by revenue growth across the BSI and BEST segments and geographies. Further, the raised 2021 guidance boosted by the solid second-quarter performance instills investors’ confidence in the stock. However, stiff competition and forex woes are concerns.
Let’s delve deeper.
Key Growth Drivers
Impressive Q2 Results: Bruker ended the second quarter of 2021 with better-than-expected results. Revenue growth across the BSI and BEST segments and geographies contributed to the top line. The segment reported robust demand for the company’s high-performance scientific instruments, life science and diagnostic solutions, driven by solid end-market recovery. Strong revenue and volume growth in the quarter substantially drove year-over-year gross and operating margins despite increase in R&D and marketing and sales investments in Project Accelerate 2.0. Geographically, the first-half 2021 order bookings were particularly strong in North America, China and other Asia-Pacific markets outside of Japan.
BSI Nano Group Prospects Bright: We are optimistic about BSI Nano Group performance in the second quarter of 2021. BSI systems’ second-quarter 2021 organic revenue increased in the low-30% range while aftermarket revenues grew in the high-teens organically compared to the second quarter of 2020. Geographically and on an organic basis, European revenues increased in the high-20% range. North American revenues grew more than 50% on a weak prior-year comparison. Asia-Pacific revenues grew in the high single-digits. Softer revenue performance in China and Japan was more than offset by strong revenue growth in other APAC regions. Rest of the world’s second-quarter 2021 revenues also improved year over year.
Raised 2021 Guidance: We are upbeat about Bruker’s raised 2021 financial outlook. The company expects revenue growth of approximately 17-19% compared to May-announced revenue guidance of 14-16%. Organic revenue growth is projected within 14-16%, up from the earlier guided range of 11-13%.
The company expects full-year adjusted earnings per share in the band of $1.88-$1.93, indicating an uptick of 39-43% from the 2020 reported figure (up from the previous expectation of $1.82-$1.87).
Downsides
Exposed to Currency Movement: Bruker conducts 80% of its business in international markets. Thus, currency fluctuations continue to result in foreign currency transaction losses.
Competitive Landscape: Bruker faces substantial competition in a consolidating industry and expects competition in all markets to increase further. Bruker BioSpin competes with companies that offer magnetic resonance spectrometers, mainly JEOL and Oxford Instruments. In the field of preclinical imaging, Bruker BioSpin faces competitive threat from Perkin Elmer, Mediso, Trifoil, MR Solutions, RS2D, Visualsonics (Fuji Film) and others.
Zacks Rank and Key Picks
Currently, Bruker carries a Zacks Rank #3 (Hold).
A few better-ranked stocks from the broader medical space are Envista Holdings Corporation (NVST - Free Report) , BellRing Brands, Inc. (BRBR - Free Report) and Henry Schein, Inc. (HSIC - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of Zacks #1 Rank (Strong Buy) stocks here.
Envista Holdings has an estimated long-term earnings growth rate of 26%.
BellRing Brands has an estimated long-term earnings growth rate of 22%.
Henry Schein has a projected long-term earnings growth rate of 14%.