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PerkinElmer (PKI) to Report Q3 Earnings: What's in Store?

Zacks Equity Research

PerkinElmer, Inc. PKI is slated to release third-quarter 2019 results on Oct 30, after the closing bell. In the last reported quarter, the company delivered a negative earnings surprise of 0.9%. Further, it has an average four-quarter positive surprise of 0.8%.

Which Way Are Estimates Treading?

For the quarter to be reported, the Zacks Consensus Estimate for earnings per share is pegged at $1.01, suggesting an improvement of 12.2% from the year-ago quarter. The same for revenues stands at $722.5 million, indicating growth of 7.2% from the year ago reported figure.

Let's see how things are shaping up prior to the announcement.

PerkinElmer, Inc. Price and EPS Surprise

 

PerkinElmer, Inc. Price and EPS Surprise

PerkinElmer, Inc. price-eps-surprise | PerkinElmer, Inc. Quote

Diagnostics Revenues: A Key Catalyst

PerkinElmer's Diagnostics segment is likely to have contributed substantially to its third-quarter  results. Sustained growth across the company's reproductive health, immunodiagnostics and applied genomics business lines is anticipated to get reflected in the segment’s revenues in the third quarter.

Rising demand for earlier diagnosis and increase in adoption of new technologies has been fueling growth across all three of segments of reproductive health, immunodiagnostics and genomics, a trend that is likely to have continued in the to-be-reported quarter.

Further, the continued rise in infectious and autoimmune diseases, especially in emerging markets, is likely to have benefited the segment.

Reflective of these, the Zacks Consensus Estimate for the segment's third-quarter revenues stands at $297 million, indicating an improvement 10.8% year over year.

Other Factors at Play

PerkinElmer is likely to have witnessed solid international growth in the to-be-reported quarter. Improved growth momentum in APAC, robust growth trend in the United States and moderate improvement in the low-single digits in Europe is likely to have contributed to the third-quarter performance.

Acquisitions and strategic partnerships are likely to get reflected in PerkinElmer’s third-quarter performance. In fact, the Cisbio buyout is anticipated to contribute $35 million in revenues and around 2 cents of adjusted earnings per share to the company in 2019, a trend that is likely to get reflected in the to-be-reported quarter.

Additionally, the company’s Discovery product portfolio is likely to have seen strong demand on the back of probable robust performance by life sciences. PerkinElmer is likely to have witnessed substantial organic revenue growth in the company’s imaging and detection product lines, which is anticipated get reflected in Discovery and Analytical Solutions segment’s third-quarter performance.

The company’s bottom line is anticipated to reflect expected organic revenue growth and better margin expansion. In fact, for the third quarter, earnings per share is estimated at $1.01. In terms of revenues, the company projects reported revenues of $724 million in the third quarter, representing 6-7% organic revenue growth.

Productivity initiatives and volume leverage are likely to have contributed to the company’s improvement in gross and operating margins in the third quarter. New product introductions are likely to have improved product mix and thereby gross margin.

Additionally, the company has been implementing plans to invest in high-growth areas, shift the organization to a more unified structure, thereby this likely to have aided expansion in operating margins.

However, PerkinElmer estimates a headwind of $1 million or less in to-be-reported quarter from China. Moreover, the company is likely to have borne the impact of tariffs in the Discovery & Analytical Solutions unit at the high end since the company exports products from the United States to China.

Additionally, PerkinElmer anticipates foreign exchange to affect third-quarter 2019 results by approximately $7 million.

Here’s What the Quantitative Model Suggests

Per our proven model, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to deliver a positive earnings surprise. This is not the case here as you will see below.  

Earnings ESP: PerkinElmer has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: PerkinElmer carries a Zacks Rank #4 (Sell).

Stocks Worth a Look

Here are a few medical stocks worth considering as they have the right combination of elements to post an earnings beat this quarter.

AmerisourceBergen Corporation ABC has an Earnings ESP of +0.55% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cardinal Health, Inc. CAH has an Earnings ESP of +0.69% and a Zacks Rank #3.

Patterson Companies, Inc. PDCO has an Earnings ESP of +2.44% and a Zacks Rank #3.

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PerkinElmer, Inc. (PKI) : Free Stock Analysis Report
 
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