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Bruker's NANO Grows Strong, MERLIN Buyout Holds Promise

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On Nov 08, we issued an updated research report on Bruker Corporation (BRKR - Free Report) . The stock carries a Zacks Rank #3 (Hold).

Bruker exited the third quarter on a solid note with better-than-expected earnings and revenue performance. Scientific Instruments segment performed well with strong results driving growth in NANO and CALID groups.

Last three quarters, the NANO Surfaces group business realized profitability owing to prior restructuring and cost actions. In the reported quarter, high-single-digit growth was driven by contributions from Hysitron nanoindenting product’s acquisition in late January and improved results at the AXS business.

Moving on, the company’s strategic acquisition activity has also been encouraging. For instance, the company recently announced the completion of Germany-based MERLIN’s buyout. Products of this company can complement Bruker’s MALDI Biotyper platform.

More good news is that Bruker’s MALDI Biotyper franchise has grown into an impressive system worth approximately $90 million per annum. We are happy to note that demand for the MALDI Biotyper is increasing in applied markets, specifically for food, feed and beverage categories/segments. Based on recent developments witnessed in its product portfolio, management believes that Bruker is poised to double its microbiology business over the next four to five years.

Shares of the company have been trading above the broader industry over the last three months. The stock has returned 20.1%, higher than the broader industry’s 11.2% gain during the period. The company’s raised 2017 guidance is indicative of brighter prospects.

On the flip side, Bruker conducts 80% of its business in international markets. As a result, adverse currency fluctuations continue to incur losses for the company. Also, headwinds like unfavorable economic conditions and intense competition continue to pose threats.

Key Picks

A few better-ranked stocks in the broader medical sector are PetMed Express, Inc. , Luminex Corp. (LMNX - Free Report) and Intuitive Surgical, Inc. (ISRG - Free Report) . While PetMed and Luminex sport a Zacks Rank #1 (Strong Buy), Intuitive Surgical carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PetMed has a long-term expected earnings growth rate of 10%. The stock has rallied roughly 12.7% over the last six months.

Luminex has a long-term expected earnings growth rate of 16.3%. The stock has gained 2.1% in the last six months.

Intuitive Surgical has a long-term expected earnings growth rate of 9.1%. The stock has surged 38.5% over the last six months.

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