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Bruker (BRKR) Down 9.3% Since Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Bruker Corporation (BRKR - Free Report) . Shares have lost about 9.3% in that time frame.

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

Recent Earnings

Bruker reported adjusted earnings per share (EPS) of 51 cents in the fourth quarter of 2017, up 10.9% from the year-ago figure. Also, adjusted EPS beat the Zacks Consensus Estimate by a couple of cents.

Revenues in Detail

Bruker reported revenues of $530.5 million in the fourth quarter, up 12.8% year over year. The top line surpassed the Zacks Consensus Estimate of $507 million.

Excluding a 3.6% positive effect from acquisitions and a 5.2% favorable impact from changes in foreign currency rates, Bruker reported year-over-year organic revenue growth of 4%.

Geographically and currency adjusted, European revenues improved in high-single digits year over year in the fourth quarter. North America revenues declined mid-single digits. In Asia Pacific, organic revenues increased double digits. China revenues rose mid-single digits in the fourth quarter.

Per management, the company registered organic revenue growth on strength in NANO and BEST.

Bruker’s BioSpin Group revenues declined low-single digits on an organic basis due to customer push outs into to 2018.

Revenues in the NANO group increased low-teens on an organic basis with significant growth in semiconductor metrology business and in the X-ray and nano-analysis products for material research, industrial and academic research applications.

CALID revenues were up low-single digits on an organic basis with strong performance in the mass spec and optics product line. This was partially offset by a year-over-year decline in CALID detection business. BEST revenues rose 11.6% organically.

Margin Trend

As a percentage of revenues, gross margin in the reported quarter expanded 124 basis points (bps) to 48.1%. Selling, general & administrative expenses increased 12% to $112.1 million. Research and development expenses rose 13.9% year over year to $43.5 million. Overall, adjusted operating margin expanded 132 bps to 18.8%. The other charges rose 13.5% year over year to $5.9 million. 

Financial Position

Bruker exited 2017 with cash and cash equivalents and short-term investments of $439.2 million, down from $500.3 million at the end of the preceding year. Full-year 2017 net cash used in operating activities was $30.2 million compared with $21.8 million in the year-ago period.

2017 at a Glance

In 2017, Bruker's revenues rose 9.6% to $1.77 billion from $1.61 billion in 2016. The figure beat the Zacks Consensus Estimate of $1.74 billion. In fiscal 2017, Bruker's year-over-year organic revenue growth was 3.6%, while growth from acquisitions was 4.8%. The favorable effect from changes in foreign currency rates was 1.2%.

Adjusted EPS for 2017 was $1.21 compared with $1.19 in 2016. The figure surpassed the Zacks Consensus Estimate of $1.19.

2018 Guidance

Bruker issued guidance for 2018. For 2018, the company expects revenue growth of approximately 7%, including organic revenue growth of approximately 3%. The company expects a year-over-year increase in adjusted operating margin in the range of 50-80 bps.

For fiscal 2018, Bruker expects adjusted EPS in the range of $1.34-$1.38, up 11-14% from the previous range. The Zacks Consensus Estimate of $1.34 is at the lower end of the company’s guidance.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to three lower.

Bruker Corporation Price and Consensus

VGM Scores

At this time, BRKR has an average Growth Score of C, however its Momentum is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

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

Based on our scores, the stock is more suitable for momentum investors than those looking for value and growth.

Outlook

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




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