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Here's Why You Should Retain PerkinElmer (PKI) Stock Now

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PerkinElmer, Inc. (PKI - Free Report) is well-poised for growth, courtesy of a robust product portfolio and impressive margin expansion. However, forex remains a concern.

Shares of this currently Zacks Rank #3 (Hold) company have gained 20% compared with the industry’s growth of 2.3% over the past year. The S&P 500 Index has rallied 5.8% in the same time frame.

PerkinElmer — with a market capitalization of $20.36 billion — offers scientific instruments, consumables and services to pharmaceutical, biomedical, environmental testing, chemical and general industrial markets worldwide. It anticipates earnings to improve 46.5% over the next five years. The company pulled off a trailing four-quarter earnings surprise of 23.8%, on average.

Key Catalysts

PerkinElmer delivers a comprehensive suite of scientific informatics and software solutions to aggregate data into actionable insights in an automated and scalable way.

Per management, the company spent an incremental $25 million on people and digital capabilities and invested more than $200 million in R&D to continuously develop a robust pipeline of products across a full array of technologies.

In December 2021, PerkinElmer introduced the research use only (RUO) NEXTFLEX Variant Seq SARS-CoV-2 Kit v2 to accelerate the detection of SARS-CoV-2 variants. This complete next-generation sequencing solution will aid laboratories in bolstering sequencing throughput and delivering reliable variant detections.

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In October, the company collaborated with Honeycomb Biotechnologies, Inc. to commercially introduce the first of its kind HIVE scRNAseq Solution for single-cell isolation and analysis. This unique product advances single-cell profiling, enabling scientists to capture, store and study fragile cell types. In the same month, PerkinElmer announced that it received Emergency Use Authorization (EUA) from the FDA for the PKamp Respiratory SARS-CoV-2-RT-PCR Panel 1 assay. Following this announcement, qualified laboratories were able to commence using this single test immediately for the simultaneous qualitative identification and differentiation of SARS-CoV-2, influenza A, influenza B and respiratory syncytial virus (RSV) — separated from nasopharyngeal swabs, anterior nasal swabs and mid-turbinate swabs.

Again, in October, EUROIMMUN — a PerkinElmer company — announced that it received the FDA’s EUA for its Anti-SARS-CoV-2 S1 Curve ELISA (IgG). This assay enables the qualitative and semi-quantitative detection of IgG antibodies produced against the SARS-CoV-2 S1 antigen in human serum and plasma.

The company’s gross and operating margin continues to improve on the back of productivity initiatives and volume leverage. The product introductions are anticipated to enhance the product mix, increasing the gross margin. This, coupled with stringent cost control, will continue to drive the operating margin in the near term.

Per the fourth-quarter 2021 earnings call, the company demonstrated solid performance despite COVID-19-induced challenges. The company’s adjusted operating margin remained strong at 34%.

Factor Hurting the Stock

Growing exposure to the international markets makes the company susceptible to the risk of adverse foreign exchange volatility. The unfavorable fluctuations in currency exchange rates can affect PerkinElmer’s international sales. Per the fourth-quarter 2021 earnings call, foreign exchange hurt revenues by 1%.

Estimate Trend

PerkinElmer has been witnessing an upward estimate revision trend for 2022. In the past 90 days, the Zacks Consensus Estimate for its earnings moved north by 6.9% to $6.92.

The Zacks Consensus Estimate for first-quarter 2022 revenues is pegged at $1.18 billion, suggesting a decline of 9.7% from the year-ago reported number.

Stocks to Consider

Some better-ranked stocks from the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Henry Schein, Inc. (HSIC - Free Report) and Abiomed, Inc. (ABMD - Free Report) .

AMN Healthcare surpassed earnings estimates in each of the trailing four quarters, the average surprise being 20%. The company currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AMN Healthcare’s long-term earnings growth rate is estimated at 16.2%. AMN’s earnings yield of 8.9% compares favorably with the industry’s (0.3%).

Henry Schein beat earnings estimates in each of the trailing four quarters, the average surprise being 25.5%. The company currently carries a Zacks Rank #2 (Buy).

Henry Schein’s long-term earnings growth rate is estimated at 11.8%. HSIC’s earnings yield of 5.3% compares favorably with the industry’s 3.6%.

Abiomed surpassed earnings estimates in each of the trailing four quarters, the average surprise being 9.2%. The company currently carries a Zacks Rank #2.

Abiomed’s long-term earnings growth rate is estimated at 20%. ABMD’s earnings yield of 1.5% compares favorably against the industry’s (6.4%).