Sigma-Aldrich (SIAL) reached a new 52-week high of $98.18 on May 27, eclipsing its previous high of $98.04. The stock retraced a bit to end the trading session at $98.01 on that day.
The lab chemical and life sciences company, which has a market cap of around $11.7 billion, has seen its shares rise roughly 17% over a year. Average volume of shares traded over the last three months is around 549.5K.
What's Driving SIAL?
Sigma-Aldrich’s profit for first-quarter 2014, reported on Apr 24, rose year over year as weakness in its research business was offset by gains in other areas. Adjusted earnings of $1.06 per share topped the Zacks Consensus Estimate of $1.03.
Sigma-Aldrich, a Zacks Rank #3 (Hold) stock, has delivered positive earnings surprises in trailing four quarters with an average surprise of 2.71%.
Sigma-Aldrich’s significant investments in sales, marketing and R&D initiatives are generating demand for its products. The company is seeking to take advantage of country-specific opportunities by expanding its presence in high-growth emerging markets. It is actively expanding its foothold in the Asia-Pacific region, especially in the fast-growing emerging markets of India and China.
Sigma-Aldrich has also taken up cost control and plant process improvement measures and is effectively managing its working capital, contributing to healthy free cash flow generation. The BioReliance acquisition, which extended the company's reach into the promising new market of biologic drugs, should add to its growth this year.
In addition, Sigma-Aldrich remains committed to offering incremental returns to its shareholders through dividends and share repurchases. The company, in Feb 2014, announced a 7% hike in its quarterly dividend to 23 cents per share.
That said, Sigma-Aldrich’s research business, especially with large pharmaceutical companies, is expected to continue to face challenges due to weak academic spending in the U.S. and Europe. Uncertainty surrounding academic funding (in particular in the U.S.) is expected to sustain through first-half 2014.
Other Stocks to Consider
Other companies in the specialty chemical space with favorable Zacks Rank include International Flavors & Fragrances Inc. (IFF), Sensient Technologies Corporation (SXT) and Zep, Inc. (ZEP) with all holding a Zacks Rank #2 (Buy).
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