In a strong market for life sciences, a market that has seen Sartorius (OTC:SARTF) jump more than 70% over the past year, Bio-Rad (BIO) more than 60% over the past year, and Thermo Fisher (TMO) over 45%, PerkinElmer's (PKI)
almost 30% climb doesn't seem quite so special. Part of the issue is an
ongoing challenge with the company hitting its growth and margin
targets (it seems like it can do one or the other in a given period, but
not both), but I believe the lack of leverage to bioproduction is a
drawback as well. Although a new CEO and a shifted set of priorities
could help the former, it doesn't look as though PerkinElmer management
is contemplating a major near-term shift in the business mix.
As
is so often the case for me in life sciences today, I like the
companies but not the valuations. Mid-teens annualized FCF growth would
only support a mid-single-digit annualized return at today's level, so I
can't really call this a favorite idea now. The stock has proven to be
volatile over the last couple of years, though, so this is a name worth
considering for a watch list.
Read the full article here:
PerkinElmer Refocusing On Its Best Growth And Margin Opportunities
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