Bruker Corporation (BRKR Quick QuoteBRKR - Free Report) is gaining from strength across the Bruker Scientific Instruments (BSI) and Bruker Energy & Supercon Technologies (BEST) arms. The company ended third-quarter 2021 with better-than-expected results. Robust revenue growth in the BioSpin Group and CALID Group buoys optimism. However, escalating expenses and foreign currency fluctuations do not bode well.

Over the past year, this Zacks Rank #2 (Buy) stock has gained 62.8% compared with 35.6% growth of the industry and 26.1% rise of the S&P 500 composite.

The renowned medical device company has a market capitalization of $12.72 billion. Its earnings for third-quarter 2021 surpassed the Zacks Consensus Estimate by 40%.

Over the past five years, the company has gained 7.4%, ahead of the industry’s 9.5% rise and the S&P 500’s 2.8% increase. The long-term expected growth rate is estimated at 20.6%, compared with the industry’s growth expectation of 23.1% and the S&P 500’s estimated 11.6% growth.

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Let’s delve deeper.

Factors at Play

Q3 Upsides: Bruker ended the third quarter of 2021 with better-than-expected earnings and revenues. Strong performance across all geographies buoys optimism. Revenue growth across the BSI and BEST businesses drove the top line in the reported quarter. Robust demand and order bookings in both Core and Project Accelerate businesses are added positives. Geographically, the company saw strong order trends in North America and the Asia Pacific, including China. Further, the company has raised its financial outlook for 2021, indicating that this growth momentum will continue.

BSI Nano Group Grows: We are upbeat about Bruker’s Nano Group’s microelectronics and semiconductor metrology tools that continue to exhibit robust performance on strength in bookings and backlog. During the third quarter, the business saw revenue growth of 18.9%, with advanced X-ray, Nano Surfaces and Nano Analysis tools registering a substantial year-over-year increase in revenues. Revenues from life science fluorescence microscopy climbed sharply year over year, driven by product innovation and strong academic demand. The Nano group’s organic revenue rose in the high-teens percentage range on strength in industrial research and academic businesses.

CALID Group Holds Potential: During the third quarter, Bruker’s CALID Group recorded an improvement of 13.4% year over year. The robust performance in this business in the first nine months of 2021 primarily resulted from continued growth in mass spectrometry and microbiology businesses along with strength in the FTIR/Near IR/Raman molecular spectroscopy products lines. Further, consistent growth in the timsTOF unbiased 4D proteomics platform and a rebound in research MALDI TOF product line raises our optimism.

Strong Prospects for BioSpin: BioSpin Group revenues improved 22.6% from the year-ago quarter during the third quarter. BioSpin achieved revenue recognition of its third gigahertz class system, a 1.2-gigahertz NMR installed at Utrecht University in the Netherlands, this year. The segment’s revenues also benefited from early revenue recognition of certain gigahertz NMR class systems in China. BioSpin Systems revenues increased significantly year over year, which consisted of revenue recognition on 3-gigahertz class NMR systems year to date.

Downsides

Escalating Expenses: Bruker’s escalating operating expense is a matter of concern at present. In the third quarter, selling, general & administrative expenses rose 23.3%, whereas research and development expenses increased 7.9% year over year. This rise in operating expenses drove adjusted operating expenses by 18.7% year over year. Per the company, operating expenses during the third quarter also included the anticipated increase in certain Project Accelerate 2.0 investments.

Exposure to Currency Movement: Since Bruker conducts 80% of its business in international markets, currency fluctuations continue to result in foreign currency transaction losses at the company. In addition, currency fluctuations could cause the price of Bruker’s products to be less competitive than its principal competitors' offerings.

Estimate Trend

Bruker has been witnessing a positive estimate revision trend for 2021. Over the past 90 days, the Zacks Consensus Estimate for its earnings has moved 8.9% north to $2.09.

The Zacks Consensus Estimate for its fourth-quarter 2021 revenues is pegged at $662.9 million, suggesting a 5.6% rise from the year-ago reported number.

Key Picks

A few better-ranked stocks in the broader medical space are Omnicell, Inc. (OMCL Quick QuoteOMCL - Free Report) , Varex Imaging Corporation (VREX Quick QuoteVREX - Free Report) and West Pharmaceutical Services, Inc. (WST Quick QuoteWST - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Omnicell has a long-term earnings growth rate of 16%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 17.4%, on average.

Omnicell has outperformed its industry over the past year. OMCL has gained 65.3% against the 39.2% industry decline.

Varex has a long-term earnings growth rate of 5%. The company surpassed earnings estimates in the trailing four quarters, delivering an average surprise of 115.3%.

Varex has outperformed the industry it belongs to in the past year. VREX has gained 76.1% versus the industry’s 4.7% fall.

West Pharmaceutical has a long-term earnings growth rate of 27.6%. The company surpassed earnings estimates in the trailing four quarters, delivering an average surprise of 29.4%.

West Pharmaceutical has outperformed its industry over the past year. WST has gained 64.5% against the industry’s 13.3% fall.