Back to top

Image: Bigstock

Zacks Industry Outlook Highlights Mettler-Toledo and Bruker

Read MoreHide Full Article

For Immediate Release

Chicago, IL – May 15, 2024 – Today, Zacks Equity Research discusses Mettler-Toledo International (MTD - Free Report) and Bruker (BRKR - Free Report) .

Industry: Scientific Instruments

Link: https://www.zacks.com/commentary/2273334/2-instruments-stocks-to-watch-from-a-prospering-industry

The Zacks Instruments - Scientific industry is benefiting from increasing healthcare spending, driven by aging demography, and continued innovation in the pharma and life sciences end-markets. Higher demand for generic drugs and biosimilars is driving growth for scientific tool and apparatus providers. Industry participants like Mettler-Toledo International and Bruker are gaining from the growing testing needs of newer biological drugs.

Increased scrutiny of per and polyfluoroalkyl substances in food and water is driving the need for instruments. Moreover, the increasing demand for automated solutions that help in ensuring compliance is noteworthy. However, the industry continues to suffer from challenging macroeconomic conditions, reduced demand in China, the sluggish European economy, the continuing war in Ukraine and the conflict in the Middle East.

Industry Description

The Zacks Instruments - Scientific industry comprises companies offering scientific instruments, analytical tools, diagnostic solutions, precision instruments & services, and test & sensor solutions. The primary end markets served by the industry participants are life science research in academia, medical schools and government, pharmaceuticals and biotechnology, microbiology and diagnostics, nanotechnology, and materials science research.

A few companies also serve the food and nutritional safety, biochemical and industrial spaces. Most industry participants are under stringent regulatory scrutiny worldwide. They have to adhere to the U.S. Food and Drug Administration and the U.S. Environmental Protection Agency norms, as well as rules set by other global regulatory bodies, for serving highly regulated end-markets like life sciences and pharma.

3 Trends Shaping the Instruments - Scientific Industry's Future

Strong End-Market Demand: The industry is benefiting from strong end-market demand, particularly from the life science, pharmaceutical and academic markets. Increasing demand for generic drugs and biosimilars is driving growth for scientific tool and apparatus providers. Pharma companies are focused on rapidly growing areas like proteomics and phenomics, biopharma and applied, microbiology and diagnostics, and neuroscience and cell microscopy. This creates significant demand for the instruments provided by industry participants.

Aging Demography Driving Spending: Socioeconomic factors like aging demography and increasing environmental regulations are fueling the demand for scientific measurement solutions. Robust worldwide healthcare spending is another major growth driver.

Emerging Market Prospects Solid: The industry is gaining from increasing exposure to developing economies like China and India. Prospects in China are huge as regulators attempt to raise the country’s biopharma industry to global standards. Efforts to improve the country’s drug development process and production quality are noteworthy. Robust investments in segments like lithium-ion batteries and biopharma are driving prospects. The growing demand for automation is a long-term driver in China. These factors result in a strong demand for instruments.

Zacks Industry Rank Indicates Bullish Prospects

The Zacks Instruments - Scientific industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #43, which places it in the top 17% of more than 250 Zacks industries.

The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bullish near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.

The industry’s position in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, analysts are optimistic about this group’s earnings growth potential. Since Nov 30, 2023, the industry’s earnings estimates have moved up 1.5%.

Given the bullish near-term outlook, there are a few stocks in the industry worth watching. Before we present those stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.

Industry Lags Sector and S&P 500

The Zacks Instruments – Scientific industry has underperformed the broader Zacks Computer and Technology sector and the S&P 500 composite over the past year.

The industry has gained 5.6% over this period compared with the S&P 500’s increase of 26.5% and the broader sector’s return of 39.7%.

Industry's Current Valuation

On the basis of the forward 12-month P/E, which is a commonly used multiple for valuing scientific instrument stocks, we see that the industry is currently trading at 29.13X compared with the S&P 500’s 20.90X and the Zacks Computer and Technology sector’s 25.95X.

Over the last five years, the industry has traded as high as 43.21X and as low as 24.14X, with a median of 29.68X.

2 Scientific Instruments Providers to Watch

Mettler-Toledo: This Zacks Rank #2 (Buy) company is benefiting from portfolio strength, cost-cutting efforts, robust sales and marketing strategies, benefits from investments in Spinnaker sales, and field resources. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of this Polaris Parkway, Columbus-based company have gained 20.4% in the year-to-date period. The Zacks Consensus Estimate for Mettler-Toledo’s current-year earnings has been unchanged at $39.90 per share in the past 30 days.

Bruker: This Billerica, MA-based company is riding on its innovative portfolio. The company continues on its trajectory of delivering excellent organic growth. It expects second-quarter organic revenues to be up mid-single-digits organically on a year-over-year basis. Bruker also expects to see sequential improvement in non-GAAP operating margin performance in the second quarter of 2024 and significant improvement in the second half of 2024.

Acquisitions including Bruker Cellular Analysis (formerly PhenomeX), ELITech and Chemspeed are expected to drive top-line growth.

The Zacks Consensus Estimate for Bruker’s current-year earnings has increased by a couple of cents to $2.74 per share over the past 30 days. Shares of this Zacks Rank #3 (Hold) company have gained 11.4% year to date.

Why Haven’t You Looked at Zacks' Top Stocks?

Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.

Today you can access their live picks without cost or obligation.

See Stocks Free >>

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com

https://www.zacks.com

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Mettler-Toledo International, Inc. (MTD) - free report >>

Bruker Corporation (BRKR) - free report >>

Published in