Brooks Automation (BRKS - Free Report) recently announced that it is acquiring New Jersey-based genomics company, GENEWIZ Group for roughly $450 million. This is the company’s largest acquisition to-date in the life sciences space. The transaction is expected to close by the end of 2018.
GENEWIZ offers gene sequencing and synthesis services to more than 4,000 institutional customers worldwide. The company’s primary end-markets are pharmaceutical and academic institutions. The acquisition significantly expands Brooks Automation’s footprint in the life sciences market, primarily in the Genomics services.
GENEWIZ has significant growth prospects in next-gen and Sanger sequencing market. The company’s addressable market size is expected to see a CAGR of 17% between 2018 and 2023.
Brooks Automation expects the acquisition to contribute revenues of $140 million in fiscal 2019. Non-GAAP gross margins are expected to be almost 50%. GENEWIZ is immediately accretive to non-GAAP earnings.
Brooks Automation shares jumped 5.1% to close at $33.79 on Sep 26. The stock has returned 41.7% year to date, while the Zacks Electronics Manufacturing Machinery industry has lost 8.2%.
Acquisitions Expanding Life Sciences Footprint
Brooks Automation has been focusing on its high growth and high margin businesses, particularly the Life Sciences segment. The company ventured into the segment in 2011, and since then has been ramping up investments to develop its footprint in this segment.
Acquisitions have also played an important role in curving out Brooks Automation’s growth trajectory in the Life Sciences market. Since 2011, Brooks Automation has acquired 11 companies for almost $365 million to bolster its position in this market.
In the last reported quarter, Brooks Life Sciences ("BLS") jumped 35% year over year to $50 million, driven by 44% surge in storage services revenues and B3 cryo sales. Organic growth was 13% in the quarter.
While PBMMI and BioSpeciMan’s acquisitions contributed handsomely, storage services’ organic growth of 22% reflected strong opportunities for the company in this space.
We believe that Brooks Automation’s strong core portfolio coupled with growing Life Sciences segment will provide it a competitive edge.
Zacks Rank & Key Picks
Currently, Brooks Automation has a Zacks Rank #3 (Hold).
Nikon (NINOY - Free Report) , KLA-Tencor (KLAC - Free Report) and Lattice Semiconductor (LSCC - Free Report) are better-ranked stocks in the broader computer and technology sector. All three companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Nikon, KLA-Tencor and Lattice is currently pegged at 11.57%, 9.82% and 12.50%, respectively.
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