Strong Buy on Brooks Automation - Analyst Blog

Zacks Investment Research upgraded Brooks Automation, Inc. (BRKS) to a Zacks Rank #1 (Strong Buy) on Jan 22, 2014.

Why the Upgrade?

We find the growth prospects of Brooks Automation very bright as can be deduced from the year-over-year earnings growth rate of 80.0% for fiscal 2014 (ending Sep 2014) and 86.1% for fiscal 2015. The company's share price has witnessed a jump of 2.9% since the release of the fiscal fourth quarter 2013 (ended Sep 2013) results on Nov 14, 2013.

A brief snapshot of Brooks Automation's financial results for the fiscal fourth quarter 2013 is provided below.

Earnings per share in the quarter were 13 cents, up from 11 cents reported in the year-ago quarter and 225.0% above the Zacks Consensus Estimate of 4 cents. Revenue generated in the quarter was $118.2 million, down 1.0% year over year. The revenue decline was more than offset by a decrease in cost of sales that led to a 5.0% increase in gross profit. Gross margin in the quarter came in at 34.3% versus 32.3% in the year-ago quarter.

For the fiscal first quarter 2014, Brooks Automation expects revenue in the band of $119–$124 million and non-GAAP earnings within 4 cents to 7 cents.

Over the last 60 days, the Zacks Consensus Estimate has increased by 8.1% to 67 cents for fiscal 2015. Besides the increase in the consensus estimate, the positive average earnings surprise of 134.6% in the last four quarters raises our optimism for the quarters ahead.

Other Stocks to Consider

Brooks Automation currently has a market capitalization of $670 million. Other stocks worth considering in the industry include Ultra Clean Holdings Inc. (UCTT), Amtech Systems Inc. (ASYS) and Oclaro, Inc. (OCLR). While Ultra Clean Holdings holds a Zacks Rank #1 (Strong Buy), both Amtech Systems and Oclaro carry a Zacks Rank #2 (Buy).