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Bruker (BRKR) Beats on Q4 Earnings & Revenues, Issues View


Bruker Corporation BRKR reported adjusted earnings per share (EPS) of 51 cents in the fourth quarter of 2017, up 10.9% from the year-ago figure. Also, adjusted EPS beat the Zacks Consensus Estimate by a couple of cents.

Revenues in Detail

Bruker reported revenues of $530.5 million in the fourth quarter, up 12.8% year over year. The top line surpassed the Zacks Consensus Estimate of $507 million.

Excluding a 3.6% positive effect from acquisitions and a 5.2% favorable impact from changes in foreign currency rates, Bruker reported year-over-year organic revenue growth of 4%.

Bruker Corporation Price, Consensus and EPS Surprise

Bruker Corporation Price, Consensus and EPS Surprise | Bruker Corporation Quote

Geographically and currency adjusted, European revenues improved in high-single digits year over year in the fourth quarter. North America revenues declined mid-single digits. In Asia Pacific, organic revenues increased double digits. China revenues rose mid-single digits in the fourth quarter.

Per management, the company registered organic revenue growth on strength in NANO and BEST.

Bruker’s BioSpin Group revenues declined low-single digits on an organic basis due to customer push outs into to 2018.

Revenues in the NANO group increased low-teens on an organic basis with significant growth in semiconductor metrology business and in the X-ray and nano-analysis products for material research, industrial and academic research applications.

CALID revenues were up low-single digits on an organic basis with strong performance in the mass spec and optics product line. This was partially offset by a year-over-year decline in CALID detection business. BEST revenues rose 11.6% organically.

Margin Trend

As a percentage of revenues, gross margin in the reported quarter expanded 124 basis points (bps) to 48.1%. Selling, general & administrative expenses increased 12% to $112.1 million. Research and development expenses rose 13.9% year over year to $43.5 million. Overall, adjusted operating margin expanded 132 bps to 18.8%. The other charges rose 13.5% year over year to $5.9 million.

Financial Position

Bruker exited 2017 with cash and cash equivalents and short-term investments of $439.2 million, down from $500.3 million at the end of the preceding year. Full-year 2017 net cash used in operating activities was $30.2 million compared with $21.8 million in the year-ago period.

2017 at a Glance

In 2017, Bruker's revenues rose 9.6% to $1.77 billion from $1.61 billion in 2016. The figure beat the Zacks Consensus Estimate of $1.74 billion. In fiscal 2017, Bruker's year-over-year organic revenue growth was 3.6%, while growth from acquisitions was 4.8%. The favorable effect from changes in foreign currency rates was 1.2%.

Adjusted EPS for 2017 was $1.21 compared with $1.19 in 2016. The figure surpassed the Zacks Consensus Estimate of $1.19.

2018 Guidance

Bruker issued guidance for 2018. For 2018, the company expects revenue growth of approximately 7%, including organic revenue growth of approximately 3%. The company expects a year-over-year increase in adjusted operating margin in the range of 50-80 bps.

For fiscal 2018, Bruker expects adjusted EPS in the range of $1.34-$1.38, up 11-14% from the previous range. The Zacks Consensus Estimate of $1.34 is at the lower end of the company’s guidance.

Our Take

Bruker exited the fourth quarter on a solid note with year-over-year increase in revenues and earnings. The expansion in gross and operating margin buoys optimism. The company’s strategic acquisition activity has been encouraging. We are also upbeat about the company’s current focus on product development through higher R&D.

On the flip side, competitive landscape and macroeconomic headwinds continue to pose challenges for the company.

Zacks Rank & Key Picks

Bruker carries a Zacks Rank #3 (Hold).

A few better-ranked stocks that reported solid results this earnings season are PetMed Express PETS, PerkinElmer PKI and Becton, Dickinson and Company BDX. While PetMed sports a Zacks Rank #1 (Strong Buy), PerkinElmer and Becton, Dickinson carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PetMed recently reported third-quarter fiscal 2018 results. Adjusted earnings per share of 44 cents were up 88.3% from the prior-year quarter. Revenues rose 13.7% on a year-over-year basis to $60.1 million.

PerkinElmer reported fourth-quarter 2017 adjusted earnings per share of 97 cents. Adjusted revenues were approximately $641.6 million, up from $567 million in the year-ago quarter.

Becton, Dickinson reported first-quarter 2018 adjusted earnings per share of $2.48, up 3.9% at constant currency. Revenues are $3.08 billion, up 3.7% at constant currency.

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