AMETEK, Inc. AME is leaving no stone unturned to strengthen capabilities in electron microscopy field backed by strategic acquisitions.
The company’s definitive agreement to acquire Gatan from Roper Technologies ROP is a testament to its strategy.
Notably, Gatan provides instrumentation and software, which are fully compatible with all brands of electron microscopes. These products are used to improve operation and performance of electron microscopes.
Further, Gatan offers electron microscopy cameras and instrumentation, electron energy filters, software and accessories.
The latest move will expand AMETEK’s product portfolio and enhance customer offerings. We note that Gatan will join the company’s Electronic Instruments Group(EIG) after the completion of the deal.
Growth Opportunities
AMETEK with Gatan’s direct detection technology for electron microscopy is likely to rapidly gain traction in the booming global market for electron microscope.
Per a report from Grand View Research, this particular market is expected to see a CAGR of 7.4% between 2018 and 2025.
According to Market Study Report, the market is anticipated to hit $630 million in 2019, and will witness a CAGR of 8% between 2019 and 2024. Further, the report suggests that the market is expected to reach $1 billion by 2024.
We believe the latest move positions AMETEK well to capitalize on the market prospects.
Buyout to Aid Growth in EIG Segment
Gatan acquisition is expected to add strength to AMETEK’s EIG segment. It will enhance the company’s specialized offerings in high-end analytical instrumentation field.
Further, solutions from Gatan strive to improve microscopy workflows in specimen preparation, imaging and analysis. All these will aid EIG segment in gaining momentumacross high-end research works in materials and life sciences.
Notably, AMETEK generates major part of its total sales from this segment. In second quarter, 2019, it generated $820.2 million of sales (63.6% of sales) from this segment, reflecting an improvement of 10% from the year-ago quarter.
Consequently, we believe the Gatan buyout decision bodes well for the company’s drive to expand its EIG segment. Moreover, the buyout is likely to drive the top line within this segment.
Zacks Rank & Stocks to Consider
Currently, AMETEK carries a Zacks Rank #3 (Hold).
Investors interested in the broader technology sector can consider some better-ranked stocks like Adobe Systems ADBE and Rosetta Stone RST. Both the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth rate for Adobe and Rosetta Stone is currently pegged at 16.25% and 12.5%, respectively.
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