Bruker Slips to Strong Sell on Poor 2H14 Performance View - Analyst Blog

On Aug 26, 2014, Zacks Investment Research downgraded Massachusetts-based scientific instrument manufacturer Bruker Corporation (BRKR) to a Zacks Rank #5 (Strong Sell) from a Zacks Rank #4 (Sell).
 
Reasons for the Downgrade
 
Bruker reported second-quarter 2014 results on Aug 6, 2014. Despite the company registering a year-over-year improvement in the quarter, its top line missed the Zacks Consensus Estimate.
 
In the reported quarter, Bruker's revenues grossed $457.4 million, missing the Zacks Consensus Estimate by 0.11%. However, on a year-over-year basis, the top line registered a slight  improvement of 0.5%.

Despite the company having kick-started the year on a good note, management expects Bruker's performance to deteriorate in the second half of 2014. Particularly, the company expects its CAM division to deliver a substantially weaker-than-expected performance, on account of management's failed efforts to restructure or divest two significant product lines.

Moreover, the company's BEST division is anticipated to generate roughly $10 million lesser revenues in the upcoming quarter, caused by a delay in customers' ability to accept delivery of the Rosatom pilot line. Based on such discouraging growth outlook, Bruker has lowered its 2014 revenue and adjusted EPS guidance.

Moreover, due to lack of relevant boost in demand from Bruker's semiconductor, data storage and other microelectronics customers, its BMAT group orders failed to meet expectation in the first half of 2014.
 
Following the second quarter results, Bruker has witnessed downward estimate revisions. For the current quarter, most of the earnings estimates were revised down, while for the current year, all estimates moved south.
 
Consequently, the Zacks Consensus Estimate for earnings in 2014 and 2015 have declined. The Zacks Consensus Estimate for 2014 has declined 8% from 87 cents a month ago to 80 cents, while the same for 2015 has dropped 7.8% from $1.02 a month earlier to 94 cents.
 
Other Stocks to Consider
 
Better-ranked stocks in the broader medical sector include Alphatec Holdings, Inc. (ATEC), RTI Surgical Inc. (RTIX) and Bacterin International Holdings, Inc. (BONE). While Alphatec and RTI Surgical sport a Zacks Rank #1 (Strong Buy), Bacterin holds a Zacks Rank #2 (Buy).