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What's in the Offing for PerkinElmer's (PKI) Earnings in Q2?

Zacks Equity Research

PerkinElmer, Inc. PKI is expected to release second-quarter 2019 results on Jul 29, after the closing bell. In the last reported quarter, the company delivered a positive earnings surprise of 4.6%. Further, it has an average four-quarter positive surprise of 2.5%.

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 11% from the year-ago quarter. The same for revenues stands at $730.3 million, indicating growth of 3.8% 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

We expect PerkinElmer's Diagnostics segment to be a major driver for second-quarter 2019 results. The segment is likely to have witnessed higher revenues in the soon-to-be-reported quarter, primarily driven by sustained growth across the company's reproductive health, immunodiagnostics and applied genomics business lines.

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. We expect the trend to continue in the second quarter as well.

Further, the continued rise in infectious and autoimmune diseases, especially in emerging markets, is expected to drive growth in this segment.

Reflective of these, the Zacks Consensus Estimate for the segment's second-quarter revenues stands at $289 million, indicating an improvement of 5.9% year over year.

Other Factors at Play

PerkinElmer is likely to have witnessed solid international growth in the to-be-reported quarter. The company continues to anticipate improved growth momentum in APAC, robust growth trend in the United States and moderate growth in the low-single digits in Europe.

Acquisitions and strategic partnerships continue to act as key catalysts to PerkinElmer and to that end, the Cisbio buyout is anticipated to contribute $35 million in revenues and around 2 cents of adjusted earnings per share to the company for the rest of 2019. Consequently, we expect the company to witness a similar trend in the to-be-reported quarter.

Additionally, the company’s Discovery product portfolio is likely to have displayed strong demand on the back of high-content screening and in vivo imaging solutions. We expect substantial organic revenue growth in the company’s imaging and detection product lines.

The company anticipates bottom-line growth in the to-be-reported quarter on the back of expected organic revenue growth and better margin expansion. The consensus mark for the earnings per share is pegged at $1.01, indicating an improvement of 11% from the year-ago quarter. In terms of revenues, the company projects reported revenues of $730 million in the second quarter, representing 5-6% organic revenue growth. The Zacks Consensus Estimate for revenues is pegged at $730 million, suggesting growth of 3.8% from the year-ago reported figure.

Speaking about margins, the company might have experienced improved gross and operating margins in the to-be-reported quarter attributable to productivity initiatives and volume leverage. New product introductions are expected to improve product mix thereby enhancing gross margin.

Additionally, the company continues to execute on plans to invest in high-growth areas, shift the organization to a more unified structure, thereby leading to possible expansion in operating margins.

However, PerkinElmer expects a headwind of $1 million or less in to-be-reported quarter from China. Tariffs in the Discovery & Analytical Solutions unit are likely to be at the high end since the company exports products from the United States to China.

Additionally, PerkinElmer anticipates foreign exchange to affect second-quarter 2019 results by approximately $18 million.

Here’s What the Quantitative Model Predicts:

Our proven Zacks model clearly shows that a company with a solid Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has good chances of beating estimates if it also has a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

PerkinElmer has a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%, a combination that makes surprise prediction difficult.

Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks Worth a Look

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

AmerisourceBergen ABC has an Earnings ESP of +0.82% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

DENTSPLY SIRONA XRAY has an Earnings ESP of +6.95% and a Zacks Rank #1.

Amedisys, Inc. AMED has an Earnings ESP of +1.91% and a Zacks Rank #1.

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