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PerkinElmer (PKI) Q4 Earnings Beat, Diagnostics Grows Y/Y

Zacks Equity Research

PerkinElmer, Inc. PKI reported fourth-quarter 2018 adjusted earnings per share (EPS) of $1.18, which outshined the Zacks Consensus Estimate by 1.7%. EPS rose 21.6% from the year-ago quarter.

Based in Waltham, MA, this leading MedTech company reported revenues of $756.3 million. Adjusted revenues in the quarter came in at $756.5 million, which improved 17.9% year over year. Notably, both the figures surpassed the Zacks Consensus Estimate by 1.4%. Revenues grew 17.9% on a year-over-year basis.

In a year’s time, the Zacks Rank #3 (Hold) stock has rallied 13.1% against the industry’s 2.9% and the S&P 500 index’s 5% declines.

2018 at a Glance

In 2018, the company posted revenues worth $2.78 billion, which edged past the Zacks Consensus Estimate of $2.77 billion. On a year-over-year basis, the metric increased 23.1%.

Adjusted EPS for the year was $3.61, which exceeded the Zacks Consensus Estimate by a penny. EPS also surged 24.5% year over year.

PerkinElmer reports through two major segments — Discovery & Analytical Solutions (DAS) and Diagnostics .

In 2018, DAS revenues totaled $1.69 billion (61% of net revenues) and Diagnostics’ revenues came in at $1.08 billion (39%).

PerkinElmer, Inc. Price, Consensus and EPS Surprise

PerkinElmer, Inc. Price, Consensus and EPS Surprise | PerkinElmer, Inc. Quote

Segment Details

DAS

At this segment, revenues totaled $459.9 million, reflecting a 2.6% rise from the year-ago quarter. Per management, the segment saw organic growth of 5% in the reported quarter.

Coming to profits at the DAS segment, the company reported fourth-quarter 2018 adjusted operating income of $92.7 million, down 0.7% from the year-ago quarter.

Per management, growth in life sciences and applied market verticals drove the segment’s performance. Notably, imaging detection product lines and informatics drove life sciences in the quarter.

Diagnostics segment

Revenues at this segment amounted to $296.5 million, up a whopping 53.3% on a year-over-year basis. Adjusted revenues in the segment totaled $296.6 million, up 53.2% from the prior-year quarter. Organically, the segment grew 14% in the fourth quarter.

Adjusted operating income in the segment totaled $85.8 million, up significantly by 45.8% year over year. Per management, the upside can be attributed to solid reproductive health and immunodiagnostics business.

Geographical Details

All major geographies saw a strong fourth quarter, with double-digit organic revenue growth in the United States and emerging markets. Organic revenue growth in Europe came in single digits. Per management, this represents six consecutive quarters of organic revenue growth across all major geographies. Geographically, high incidence rates had helped China and Germany see high organic growth.

Margin Analysis

Gross profit in the quarter came in at $376.3 million, up 22.4% year over year. Adjusted gross margin, as a percentage of revenues, was 51.4%, up 190 basis points (bps) year over year.

Adjusted operating margin was $164.3 million, up 21.4% year over year. Adjusted operating margin, as a percentage of revenues, was 21.7% in the quarter, up 60 bps.

2019 Guidance

PerkinElmer expects 2019 EPS in the band of $4.00-$4.05. Notably, the Zacks Consensus Estimate of $4.04 lies below the mid-point of the guided range.

Conclusion

PerkinElmer exited the fourth quarter on a solid note, with both EPS and revenues beating the consensus mark. The company witnessed strong performances by its core DAS and Diagnostics units in recent times. Strength in life sciences markets and immunodiagnostics business lines led to the impressive performances. Solid international growth is also encouraging.

The recent CE-IVD mark for the company’s Vanadis NIPT is an added positive. Expansion in both gross and operating margins too buoy optimism. Solid show by Tulip and EUROIMMUN also paints a bright picture.

On the flip side, negative currency movements impacted the company’s top line in the quarter under review. Furthermore, PerkinElmer continues to acquire many companies, which increases integration risks.

Earnings of Other MedTech Majors at a Glance

Some better-ranked MedTech stocks that posted solid results in their respective quarters are Varian Medical Systems VAR, AngioDynamics ANGO and CONMED Corporation CNMD.

Varian reported fiscal first-quarter adjusted EPS of $1.06, in line with the Zacks Consensus Estimate. Revenues of $741 million outpaced the consensus mark of $717.9 million. The stock has a Zacks Rank #2 (Buy).

AngioDynamics’ fiscal second-quarter adjusted EPS of 22 cents exceeded the Zacks Consensus Estimate by a penny. Revenues totaled $91.5 million, which surpassed the consensus estimate by 2.9%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here .

CONMED delivered fourth-quarter adjusted EPS of 73 cents, in line with the Zacks Consensus Estimate. Revenues of $242.4 million outshined the Zacks Consensus Estimate of $229.2 million. The stock carries a Zacks Rank of 2.

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