Perkin Elmer Beats the Street - Analyst Blog

Perkin Elmer (PKI) reported second-quarter 2010 adjusted (excluding one-time expenses) earnings per share of 38 cents, beating the Zacks Consensus Estimate of 33 cents and the year-ago earnings of 28 cents. The quarterly results also surpassed the company’s guidance of 32 to 34 cents.

Revenues

Revenue came in at $497.8 million in the reported quarter, up 14% (up 14% on an organic basis) year over year and higher than the Zacks Consensus Estimate of $466 million.

Segment-wise

Sales from the Human Health segment were $197.5 million, up 7% (up 6% on an organic basis) year over year. Revenue from the Environment Health segment was $300.4 million, up 19% (up 19% in organic basis).

Margins

Adjusted operating profit was $65.8 million, up 120 bps year over year. Adjusted gross margin was 44.9%, slightly below 45.0% in the year-ago period. Adjusted operating margin, at 13.2%, was an improvement from 12.0% in the year-ago period.

Adjusted operating profit margin at the Human Health segment was 20.5%, ahead of 18.9% in the year-ago period. Adjusted operating profit margin at the Environment Health segment was 11.1%, an improvement from 10.3% in the year-ago quarter.

Balance Sheet

Cash and cash equivalents were $215.7 million, as of July 4, 2010, up 42.5% year over year. Long-term debt (with minor short-term borrowings) was $620.1 million, up 18.3% year over year.

Outlook

Perkin Elmer raised its earnings per share forecast for fiscal 2010 to a range of $1.29 to $1.34 from $1.08 to $1.13 earlier. Adjusted earnings per share is expected in the range of $1.49 to $1.54, up 17% to 21% year over year, and an improvement from the earlier forecast of $1.43 to $1.48.

Perkin Elmer has established itself as the market leader, particularly in the genetic screening segments, and holds one of the top two market share positions in several important subsets of the life sciences technology and genetic screening businesses. However, growth in these areas will be offset by the company's exposure to more cyclical end markets (non-healthcare end markets constitute about 40% of Perkin Elmer sales).

We currently have a long-term Neutral recommendation on Perkin Elmer.
 
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