Waters Corp. Matches Estimates - Analyst Blog

Waters Corporation (WAT) reported first quarter 2010 earnings per share from continuing operations of 78 cents, matching the Zacks Consensus Estimate. First quarter 2010 sales were $368 million, an increase of 10% from sales of $333 million in the first quarter of 2009. On a currency neutral basis, sales increased by 6% in comparison to the prior year’s first quarter sales.

Strong demand for the company’s new suite of products and improving end-market situation contributed to revenue growth in the first quarter. Shipments of new instrument systems, including the Synapt™ G-2 and ACQUITY UPLC® H-Class, clocked up robustly in the quarter while TA Instruments sales returned to growth based on improving demand from industrial chemical clients.

The analytical instrument and systems market is highly competitive. Waters encounters competition from several worldwide instrument manufacturers and other companies in both domestic and foreign markets for each of its three technologies. The company competes in its markets primarily on the basis of instrument performance, reliability, service and, to a lesser extent, price. Some competitors have instrument businesses that are generally more diversified but are typically less focused on the company’s chosen markets. Some competitors have greater financial and other resources than Waters.

Waters has a strong presence in the chromatography instrument market, which is expected to grow annually over the longer term. The company is currently one of the top three players in the mass spectrometry market. It is expected to experience sustained healthy performance in its organic sales growth over the next few years based on the strong customer demand in mass spectrometry and HPLC. A significant portion of Waters’ revenue is derived from recurring revenue sources, including consumables and services, which are expected to continue to increase over the longer term.

Waters Corporation, an analytical instrument manufacturer, designs, manufactures, sells and services, through its Waters Division, high performance liquid chromatography, ultra performance liquid chromatography ® (LC) and mass spectrometry (MS) instrument systems and support products, including chromatography columns, other consumable products and comprehensive post-warranty service plans.

We currently have a Neutral recommendation on WAT.
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