PerkinElmer Hits a 52-Week High: What’s Driving the Stock?

Shares of PerkinElmer, Inc. PKI rallied to a new 52-week high of $70.59 on Oct 5, closing a tad lower at $70.44. This represents a strong year-to-date return of approximately 35.1%, better than the S&P 500’s 13.1% over the same time frame.

PerkinElmer provides scientific instruments, consumables, and services to pharmaceutical, biomedical, environmental testing, chemical, and general industrial markets worldwide. The company currently has a Zacks Rank #3 (Hold).

For the majority of the last month, the company’s share price has considerably outperformed the broader industry. The stock has rallied 3.9% over the month, slightly higher than the industry’s gain of just 3.1%.

Notably, PerkinElmer has a market cap of $7.6 billion. Taking the stable performance of the stock into consideration, we expect PerkinElmer to scale higher in the coming quarters. The company’s long-term growth of 12.1% also holds promise.

Catalysts

Product Spectrum Broad: PerkinElmer’s expanding product portfolio is helping it win market share and boost organic growth. Through the first half of the year, organic growth has been about 3% for the company on a year-over-year basis. Within a short span of time, PerkinElmer’s new products gained significant traction among consumers. We believe the products will continue to boost the company’s market share in areas like diagnostics, research and environment.

Estimate Revision Trend Solid: The estimate revision trend for PerkinElmer is favorable at the moment. For the full year, eight analysts moved north compared to no movement in the opposite direction over the last two months. As a result, full-year estimates inched up 0.3% to $2.89 per share.

For the current quarter, five analysts moved north, compared to one movement in the opposite direction in the last two months. The Zacks Consensus Estimate for current-quarter earnings rose 1.4% to 73 cents per share over the same time frame.

Acquisitions Drive Growth: Acquisitions and strategic partnerships have been key catalysts for PerkinElmer over the years. Earlier this year, the company announced plans to acquire EUROIMMUN Medical Laboratory Diagnostics AG for approximately $1.3 billion in cash. The deal is expected to close in the fourth quarter of 2017.

The buyout will expand PerkinElmer’s reach in the autoimmune and allergy diagnostic markets. The acquisition will also reinforce the company’s capabilities pertaining to new infectious diseases in the Chinese market. Per management, the acquisition is expected to add about 28 cents to 30 cents to 2018 adjusted earnings.

Guidance Raised: PerkinElmer revised its adjusted earnings guidance for full-year 2017. The company now expects adjusted earnings per share in the band of $2.84 to $2.92, up from the previously provided range of $2.80 to $2.90.

Key Picks

A few better-ranked stocks in the broader medical sector are SONOVA HOLDING SONVY, IDEXX Laboratories, Inc. IDXX and Luminex Corporation LMNX. SONOVA and Luminex have a Zacks Rank #1 (Strong Buy), while IDEXX Laboratories has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SONOVA represented a solid return of 35% over the last year. The company has a long-term expected earnings growth rate of 7%.

IDEXX Laboratories has an average earnings beat of 9.3% over the trailing four quarters. It has a long-term expected earnings growth rate of 19.8%.

Luminex came up with a positive earnings surprise of 188.9% in the last quarter. The stock has a long-term expected earnings growth rate of 16.3%.

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