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Here's Why You Should Hold on to PerkinElmer (PKI) Stock Now
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PerkinElmer, Inc. continues to benefit from the core Diagnostics segment, robust international growth and continued margin expansion. However, forex volatility remains a concern.
The stock currently carries a Zacks Rank #3 (Hold).
Price Performance
Shares of PerkinElmer have gained 2.7%, underperforming the industry’s growth of 11.3% on a year-to-date basis. Meanwhile, the S&P 500 Index rallied 14.3% in the same timeframe.
What’s Deterring the Stock?
At the second-quarter 2019 conference call, management announced that it anticipates foreign exchange headwind of approximately $7 million for the third quarter of 2019 and $53 million for the year.
Meanwhile, on the tariff side, the company confirmed that it expects a headwind of $1 million or less in the coming quarters from China.
Growing exposure to international markets increases the risk of foreign exchange volatility that can affect the company’s international sales.
Factors to Boost PerkinElmer
The company continues to benefit from strong performance by the Diagnostics segment. In the second quarter, revenues improved both on a reported and organic basis while operating income increased significantly on a year-over-year basis. Per management, the upside can be attributed to strength across reproductive health and immunodiagnostics business lines.
The company remains well-poised to benefit from rising middle-class population in the developing countries of the Asia Pacific and Latin America. Growing demand for affordable healthcare in these regions creates significant opportunities for PerkinElmer.
Additionally, the company continues to gain traction from a comprehensive suite of scientific informatics and software solutions, which in turn helps to aggregate data into actionable insights in an automated and scalable way.
Acquisitions and partnerships have been key catalysts for PerkinElmer over the years. Moreover, acquisitions made by the company in the last few years provided a substantial boost to the company’s product portfolio.
Further, continued expansion in gross and operating margins buoys optimism. It is encouraging to note that management anticipates operating margin in 2019 to expand 120-150 bps and is confident about achieving its goal of 22% of adjusted operating margins in 2020.
Which Way Are Estimates Headed?
For 2019, the Zacks Consensus Estimate for revenues is pegged at $2.91 billion, indicating an improvement of 4.8% from the year-ago quarter’s reported figure. For adjusted earnings, the same stands at $4.05 per share, suggesting growth of 12.2% from the year-ago reported figure.
Nissan Chemical has a long-term earnings growth rate of 10%.
Fresenius Medical has a long-term earnings growth rate of 5.9%.
McKesson has a long-term earnings growth rate of 6.9%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Bigstock
Here's Why You Should Hold on to PerkinElmer (PKI) Stock Now
PerkinElmer, Inc. continues to benefit from the core Diagnostics segment, robust international growth and continued margin expansion. However, forex volatility remains a concern.
The stock currently carries a Zacks Rank #3 (Hold).
Price Performance
Shares of PerkinElmer have gained 2.7%, underperforming the industry’s growth of 11.3% on a year-to-date basis. Meanwhile, the S&P 500 Index rallied 14.3% in the same timeframe.
What’s Deterring the Stock?
At the second-quarter 2019 conference call, management announced that it anticipates foreign exchange headwind of approximately $7 million for the third quarter of 2019 and $53 million for the year.
Meanwhile, on the tariff side, the company confirmed that it expects a headwind of $1 million or less in the coming quarters from China.
Growing exposure to international markets increases the risk of foreign exchange volatility that can affect the company’s international sales.
Factors to Boost PerkinElmer
The company continues to benefit from strong performance by the Diagnostics segment. In the second quarter, revenues improved both on a reported and organic basis while operating income increased significantly on a year-over-year basis. Per management, the upside can be attributed to strength across reproductive health and immunodiagnostics business lines.
The company remains well-poised to benefit from rising middle-class population in the developing countries of the Asia Pacific and Latin America. Growing demand for affordable healthcare in these regions creates significant opportunities for PerkinElmer.
Additionally, the company continues to gain traction from a comprehensive suite of scientific informatics and software solutions, which in turn helps to aggregate data into actionable insights in an automated and scalable way.
Acquisitions and partnerships have been key catalysts for PerkinElmer over the years. Moreover, acquisitions made by the company in the last few years provided a substantial boost to the company’s product portfolio.
Further, continued expansion in gross and operating margins buoys optimism. It is encouraging to note that management anticipates operating margin in 2019 to expand 120-150 bps and is confident about achieving its goal of 22% of adjusted operating margins in 2020.
Which Way Are Estimates Headed?
For 2019, the Zacks Consensus Estimate for revenues is pegged at $2.91 billion, indicating an improvement of 4.8% from the year-ago quarter’s reported figure. For adjusted earnings, the same stands at $4.05 per share, suggesting growth of 12.2% from the year-ago reported figure.
Key Picks
Some better-ranked stocks from the broader medical space are Nissan Chemical Corporation (NNCHY - Free Report) , Fresenius Medical Care AG & Co. KGaA (FMS - Free Report) and McKesson Corporation (MCK - Free Report) , each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Nissan Chemical has a long-term earnings growth rate of 10%.
Fresenius Medical has a long-term earnings growth rate of 5.9%.
McKesson has a long-term earnings growth rate of 6.9%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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