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Bruker (BRKR) Up 2.5% 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 2.5% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Bruker Q3 Earnings Beat Estimates, Margins Expand

Bruker reported adjusted earnings per share (EPS) of 37 cents in the third quarter of 2018, up 27.6% from the year-ago figure. Adjusted EPS also exceeded the Zacks Consensus Estimate by 23.3%.

On a reported basis, earnings came in at 28 cents a share, a 21.7% surge on a year-over-year basis.

Revenues in Detail

Bruker registered revenues of $466.6 million in the third quarter, up 7.1% year over year. Moreover, the top line surpassed the Zacks Consensus Estimate of $452.5 million.

Excluding 1.5% positive effect from acquisitions and a 1.4% favorable impact from changes in foreign currency rates, Bruker generated higher organic revenues of 7% year over year.

The company’s organic revenue growth is driven by the strength in Bruker Scientific Instruments (BSI) and BEST segments.

Geographically, European revenues declined 5.4% year over year in the reported quarter while North America revenues were up 20.6%. In Asia Pacific (APAC), revenue uptick was 14.7%.

Bruker’s BioSpin Group revenues inched up 0.5% above the year-ago quarter’s level.

Revenues in the NANO group increased 13.9%, fueled by a strong uptrend in academic research and industrial research markets. CALID revenues were up 6.6% year over year.

Margin Trend

Gross margin in the quarter under review expanded 205 basis points (bps) to 47.7%. While selling, general & administrative expenses climbed 3.7% to $106.5 million. Research and development expenses rose 2.9% year over year to $41.8 million. Overall, adjusted operating margin improved 316 bps to 15.9%.

Financial Position

Bruker exited third-quarter 2018 with cash and cash equivalents plus short-term investments of $270.1 million, up from $258.7 million at the end of the second quarter. Year to date, operating cash inflow was $107.4 million in comparison to $50.7 million in the year-ago period.

2018 Guidance

Bruker updated its expectations for 2018. For the full year, the company projects revenue growth of approximately 6.5-7% including nearly 3.5-4% of organic revenue rise. The figure compares favorably with the earlier prediction of 6.5% revenue growth comprising 3.5% organic increase. The company projects a year-over-year expansion of 80 bps in adjusted operating margin including an estimated 70 bps headwind from foreign currency translation.

For 2018, Bruker raised its adjusted EPS view to a range of $1.36-$1.40, up 12-16% from the previous year’s rally (earlier projection was 1.34-$1.38, an estimated 11-14% rise from the year-ago period). The Zacks Consensus Estimate of $1.38 remains under the company’s current forecast.

How Have Estimates Been Moving Since Then?

Fresh estimates followed a downward path over the past two months. The consensus estimate has shifted -6.9% due to these changes.

VGM Scores

At this time, Bruker has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Bruker has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.




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