Citi maintains Bruker shares at Buy post investor meeting

On Monday, Citi reiterated its Buy rating on Bruker (NASDAQ:BRKR) Corporation (NASDAQ:BRKR) shares with a consistent price target of $80.00. The affirmation follows recent discussions with the company's Chief Financial Officer, Gerald Herman, during in-person investor meetings in Europe. The conversations covered a variety of topics, including Bruker's backlog situation, its recent business deals, and the potential for margin expansion.

Bruker's current backlog stands at approximately seven months, which includes a significant portion in China. Management anticipates it will take between 12 to 18 months to reduce this to a more standard five-month backlog.

Regarding China, the company is poised to benefit from the recent stimulus package, estimated at around $50 billion, which is currently being allocated by provincial governments. Bruker expects to see an increase in orders towards the fourth quarter of 2024 and the first half of 2025, with the revenue impact likely to be felt in the second half of 2025 and into 2026.

The company also expressed interest in pursuing small-scale technology acquisitions in the range of $10 to $15 million, though larger purchases are not expected in the near term. Confidence remains high in the growth trajectory of Bruker's Nano Surfaces and Translational Genomics (NSTG) business, particularly as the salesforce in Europe continues to expand.

Citi's analyst highlighted Bruker's strong position in high-end offerings, which is expected to attract orders and drive revenue growth in the coming years. The reiterated price target of $80 reflects Citi's positive outlook on Bruker's financial performance and strategic initiatives.

In other recent news, Bruker Corporation reported a significant 17.4% increase in Q2 revenues, totaling $800.7 million. This rise contributed to a 4.5% organic revenue growth for the first half of the year, bringing total revenues to $1.52 billion.

Despite challenges such as currency fluctuations and market uncertainties, Bruker maintains its full-year guidance of 5% to 7% organic revenue growth. The company's recent strategic acquisitions, including Chemspeed, ELITech, and NanoString, have been instrumental in market expansion and portfolio transformation.

TD Cowen maintained its Hold rating on Bruker, following recent meetings with the company's CFO and Investor Relations, keeping the price target at $72.00. The firm's assessment highlighted Bruker's M&A activities, key products, market segments, and strategy in China. However, Bruker anticipates a decline in China's revenue for the full year and a slower recovery in the biopharma sector.

InvestingPro Insights

As Bruker Corporation (NASDAQ:BRKR) continues to navigate through its current backlog and potential market expansions, recent data from InvestingPro provides further context to the company's financial health and market valuation. Bruker has a market capitalization of $10.23 billion, indicating its significant presence in the industry.

Despite a robust revenue growth of approximately 14.93% over the last twelve months as of Q2 2024, analysts have expressed caution, revising their earnings downwards for the upcoming period. This may reflect concerns about the company's ability to maintain its growth trajectory amid current market conditions.

InvestingPro Tips suggest that while Bruker is trading at a high P/E ratio of 28.22, which climbs even higher to 31.47 when adjusted for the last twelve months as of Q2 2024, the company's cash flows are sufficient to cover interest payments, indicating financial stability.

However, the high P/E ratio relative to near-term earnings growth and a high Price / Book multiple of 5.71 could suggest that the stock is currently valued at a premium. For investors seeking more detailed analysis, there are additional tips available on InvestingPro's platform, providing a comprehensive look at Bruker's financials and market position.

The company's profitability over the last year and the high return over the last decade reinforce its position as a solid player in its sector. With the next earnings date set for October 31, 2024, investors will be keen to see if the company's strategic initiatives and market conditions will align to meet Citi's positive outlook and price target of $80.00.

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