PerkinElmer Meeting Expectations, But Not Going Much Beyond

For a company with rich expectations embedded into the valuation, I’d say the reaction to fourth-quarter earnings and 2020 guidance from PerkinElmer (PKI) was fairly restrained. The stock has weakened a bit since earnings, but only after an impressive climb from under $80 in early October to over $100 around the time of the JPMorgan Healthcare Conference.

There are certainly attractive growth opportunities in front of PerkinElmer. I see good potential in the Chinese food testing market, the U.S. market for EUROIMMUN, and in the company’s vision of end-to-end solutions for highly-regulated industries. Vanadis could also be a real winner, given its potential value-for-performance argument. The “but” is that a lot of that already seems to be in the share price. Double-digit EBITDA and FCF growth are appealing, but shouldn’t you expect that from a stock already trading at more than 17x forward EBITDA?

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PerkinElmer Meeting Expectations, But Not Going Much Beyond