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Bruker (BRKR) Up 9.3% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Bruker (BRKR - Free Report) . Shares have added about 9.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Bruker due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Bruker Q2 Earnings Surpass Estimates, Margins Rise

Bruker delivered adjusted earnings per share of 44 cents in the second quarter of 2021, skyrocketing 109.5% year over year. Moreover, the figure surpassed the Zacks Consensus Estimate by 10%.

The adjustments include expenses related to purchased intangible amortization, acquisition-related costs and restructuring costs, among others.

GAAP EPS for the quarter was 38 cents a share, reflecting a 137.5% surge from the year-earlier figure.

Revenues in Detail

Bruker registered revenues of $570.8 million in the second quarter, up 34.4% year over year. However, the figure surpassed the Zacks Consensus Estimate by 6.1%.

Excluding the positive impact of 0.4% from acquisitions and another 6.8% from favorable changes in foreign currency rates, the company saw organic revenue growth of 27.2%.

Solid performances by all the reporting segments driven by robust demand for the company’s solutions and products and a strong recovery compared to the second quarter of 2020 significantly drove the top line.

Geographically, the United States witnessed a 55.8% year-over-year rise in revenues in the reported quarter. Europe revenues rose 39.6% year over year whereas revenues in the Asia Pacific inched up 12.9%. Further, the Other category’s revenues climbed 32.7% year over year.

Segments in Detail

Bruker reports results under three segments, namely, BSI Life Science (comprising BioSpin and CALID), BSI Nano and BEST.

In the second quarter, BioSpin Group revenues improved 18.7% from the year-ago quarter to $148.5. The segment’s solid performance in the first half of 2021 was driven by recovery in customer demand and installation activities compared to the first half of 2020. BioSpin’s aftermarket and software revenues also showed strong year-over-year growth.

CALID revenues rose 45.7% year over year to $193.3 million, primarily resulting from continued strong growth in mass spectrometry and microbiology businesses along with a rebound in FTIR neuro infrared and Raman molecular spectroscopy product line. Continued robust growth in the timsTOF 4D proteomics business and microbiology and molecular diagnostics also drove the top line.

Total BSI Life Science revenues were $341.8 million, up 32.6% year over year.

Revenues in the Nano group climbed 39.7% to $175.3 million with advanced X-ray, Nano Surfaces and Nano Analysis tools registering a substantial year-over-year increase in revenues.

The BSI segment (including BSI Life Science and BSI Nano Segments) improved 34.9% year over year, including organic revenue growth of 27.8%.

In the second quarter, the company’s BEST segment revenues were $56.6 million, up 26.3% year over year. The solid segmental performance in the first half of 2021 was driven by contributions from big science projects.

However, BEST revenues from superconductors for healthcare and MRI were below the prior-year period level.

Organically, BEST segment revenues improved 21.8%, net of intercompany eliminations.

Margin Trend

In the quarter under review, Bruker’s gross profit rose 50.7% to $280.6 million. Gross margin expanded 531 basis points (bps) to 49.2%.

Meanwhile, selling, general & administrative expenses rose 31.6% to $134.8 million. Research and development expenses went up 26.5% year over year to $55.8 million. Adjusted operating expenses of $190.6 million increased 30.1% year over year.

Adjusted operating profit totaled $90 million, reflecting a 126.7% surge from the prior-year quarter. Further, adjusted operating margin in the second quarter expanded a huge 642 bps to 15.8%.

Financial Position

Bruker exited the second quarter of 2021 with cash and cash equivalents, and short-term investments of $706 million compared with $746.8 million at the end of first-quarter 2021. Total long-term debt (including current portion) at the end of the second quarter of 2021 was $829.3 million compared with $824.2 million at the end of first-quarter 2021.

Cumulative net cash flow from operating activities at the end of the second quarter was $21.9 million compared with $11.8 million a year ago.

2021 Guidance

Bruker raised its financial outlook for 2021.

It expects revenue growth of approximately 17-19% compared to May-announced revenue guidance of 14-16%. The Zacks Consensus Estimate for revenues is pegged at $2.34 billion. 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). The Zacks Consensus Estimate for the same is pegged at $1.88.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

VGM Scores

At this time, Bruker has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Bruker has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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