On Dec 10, 2015, we issued an updated research report on Massachusetts-based Bruker Corporation BRKR, which designs and manufactures proprietary life science and materials research systems and associated products.
Bruker ended the third quarter of 2015 on a positive note, squarely beating the Zacks Consensus Estimate. The progress in Bruker’s operational activities, as evident from the enhanced margin figures, buoys optimism.
In the third quarter of 2015, the Bruker Nano Surfaces segment suffered an organic decline in revenues and new order bookings. However, the AXS Division within the segment was the sole savior. This division delivered mid-single-digit organic revenue growth in the third quarter, driven by a higher demand for its x-ray diffraction product as well as certain timing effects, thanks to improved execution of its order to revenue processes.
We are currently looking forward to the company’s recently completed acquisition of Jordan Valley Semiconductors, which will enable it to offer unique solutions for advanced problems in nanotechnology research and semiconductor metrology. According to Bruker, with trends like increased connectivity and easy access to large amounts of data, new nanometrology needs are driving growth opportunities in advanced semiconductor nodes.
With respect to MALDI Biotyper, based on the recent developments, management believes Bruker is poised to double its microbiology business over the next four to five years.
During the third quarter, the company witnessed a positive rebound in its Nuclear Magnetic Resonance (NMR) revenues, which increased across all geographies. As a result of this positive NMR performance, Bruker’s BioSpin group delivered strong organic revenue growth in the third quarter, as opposed to the bleak performance delivered in the previous quarter. Moreover, the company also observed consistent, healthy new order bookings for NMR during the quarter, which convinced management that the market is possibly recovering from the weak demand trends experienced last year.
Notably, Bruker has been pursuing a number of strategies like divestiture of certain non-core businesses, outsourcing of various manufacturing activities and transferring or ceasing operations at certain facilities, to improve its financial performance. Lately, Bruker successfully completed its CAM restructuring program, a quarter ahead of management’s expectation. It is encouraging to note that, during the third quarter, the benefits of the CAM division restructuring added 65 basis points to Bruker’s gross margin improvement. We believe such initiatives should benefit the company’s future operating results.
On the flip side, unfavorable foreign currency fluctuations continue to hinder Bruker’s growth trajectory. Evidently, changes in foreign exchange rates impacted Bruker’s revenues by 10.9% and earnings by 2 cents per share in the third quarter. Moreover, headwinds such as unfavorable economic conditions and competitive threats continue to pose concern.
Currently, the stock carries a Zacks Rank #1 (Strong Buy).
Key Picks in the Sector
Some other medical stocks worth considering are ICU Medical, Inc. ICUI, INSYS Therapeutics, Inc. INSY and Nxstage Medical, Inc. NXTM. All the three stocks sport the same Zacks Rank as Bruker.
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