UPDATE: ISI Group Downgrades PerkinElmer to Buy, Lowers PT on Disappointing Quarter Results

In a report published Friday, ISI Group analyst Ross Muken downgraded the rating on PerkinElmer

from Strong Buy to Buy, and lowered the price target from $40.00 to $36.00. In the report, Muken noted, “PerkinElmer missed top and bottom-line, with weakness stemming from declines in its environmental & safety and industrial markets in the EU & Japan, which was compounded by research declines in the US (in-vivo imaging). These areas drove an organic decline of (1%) in Environmental Health while Human Health organic revenue was flat y-o-y. Given that the revenue slippage occurred too late in the Q for management to take effective cost actions, the investments in growth and productivity projects further exacerbated the decremental margin impact. The disappointing results further caused management to lower the company's guidance for FY13 to LSD revenue growth and EPS of $2.00-$2.10. Given these results, we are downgrading PKI from Strong Buy to Buy and reducing our PT from $40.00 to $36.00 as the MT relative return is less attractive. However we contend that most of the issues the company faced in the Q were temporary and readily addressable, therefore we recommend buying on weakness (~$30). We continue to see PKI as an attractive turnaround story, with intriguing strategic optionality given its market cap in a consolidating industry.” PerkinElmer closed on Thursday at $34.47.