PerkinElmer, Inc. PKI is well poised for growth, courtesy of a robust product portfolio and impressive margin expansion. However, forex remains a concern.
Shares of this currently Zacks Rank #3 (Hold) company have lost 33.5% compared with the industry’s decline of 20.3% so far this year. The S&P 500 Index has fallen 18% in the same time frame.
PerkinElmer — with a market capitalization of $16.87 billion — offers scientific instruments, consumables and services to pharmaceutical, biomedical, environmental testing, chemical and general industrial markets worldwide. Its earnings are anticipated to improve 46.5% over the next five years. The company pulled off a trailing four-quarter earnings surprise of 12.82%, on average.
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PerkinElmer provides a comprehensive suite of scientific informatics and software solutions to aggregate data into actionable insights in an automated and scalable way.
In November, PerkinElmer recently launched ready-to-use Adeno-associated Virus Vectors (AAV) Detection Kits to aid researchers working on gene therapies for various serious diseases. The validated and fully-automatable assays are built on PerkinElmer's proprietary AlphaLISA technology. The latest launch will likely expand PerkinElmer's cell and gene therapy portfolio, which includes gene editing and modulation, cell counting, antibody and flow cytometry innovations. This will enable the company to significantly strengthen its Life Sciences business unit in the broader Discovery & Analytical Solutions segment.
PerkinElmer received the FDA’s marketing authorization for the EONIS SCID-SMA assay kit for in vitro diagnostic (IVD) use by certified laboratories for the simultaneous detection of spinal muscular atrophy (SMA) and severe combined immunodeficiency (SCID) in newborns. PerkinElmer’s Oxford Immunotec announced that the FDA approved the use of the T-Cell Select reagent kit to automate its T-SPOT.TB test workflow for IVD use by certified laboratories in September. These latest regulatory clearances are likely to aid PerkinElmer in significantly solidifying its foothold in the global IVD space and boosting its Diagnostics business.
The company launched a unique benchtop platform, Cellaca PLX Image Cytometry System, in September. The system is expected to enable researchers to evaluate multiple Critical Quality Attributes (CQAs) of cell samples in a single automated workflow, including cell identity, quality and quantity.
The company’s gross margin continues to improve on the back of productivity initiatives and volume leverage. The product introductions are anticipated to enhance the product mix, thus increasing the gross margin. This, coupled with stringent cost control, will continue to drive the operating margin in the near term.
On the third-quarter 2022 earnings call, the company demonstrated solid performance despite ongoing macro headwinds like inflationary pressure. Pro-forma adjusted revenues that include sales from held-for-sale business — Applied, Food and Enterprise Services — were up 9% organically after the exclusion of revenue growth sales from COVID products. Revenues from continuing operations were down 17% year over year and 23% organically.
Factor Hurting the Stock
Growing exposure to the international markets makes the company susceptible to foreign exchange volatility. The unfavorable fluctuations in currency exchange rates can hurt PerkinElmer’s international sales. In the third quarter, foreign exchange was a 6% headwind to revenues. For the fourth quarter of 2022, the company projects a 7% headwind from foreign exchange and 5% for the full year of 2022. Its adjusted gross margin decreased 110 basis points to 64%. The company’s adjusted operating margin was also down 600 basis points to 31.4%.
PerkinElmer has been witnessing an upward estimate revision trend for 2022. In the past 60 days, the Zacks Consensus Estimate for its earnings has moved north by 0.9% to $7.90.
The Zacks Consensus Estimate for fourth-quarter 2022 revenues is pegged at $1.07 billion, suggesting a decline of 21.8% from the year-ago reported number.
PerkinElmer, Inc. Price
PerkinElmer, Inc. price | PerkinElmer, Inc. Quote
Stocks to Consider
Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. AMN, ShockWave Medical, Inc. SWAV and McKesson Corporation MCK.
AMN Healthcare, flaunting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 3.2%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 15.7%.
You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has lost 8.7% compared with the industry’s 40.6% decline in the past year.
ShockWave Medical, sporting a Zacks Rank #1 at present, has an estimated growth rate of 33.1% for 2023. SWAV’s earnings surpassed estimates in all the trailing four quarters, the average beat being 180.1%.
ShockWave Medical has gained 13.3% against the industry’s 36.1% decline the past year.
McKesson, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 10.1%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average beat being 13%.
McKesson has gained 67.9% against the industry’s 18.9% decline over the past year.
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