PerkinElmer (PKI) to Post Q3 Earnings: What's in the Offing?

PerkinElmer, Inc. PKI is slated to release third-quarter 2020 results on Oct 28, after the closing bell. In the last reported quarter, the company delivered an earnings surprise of 68.8%. Further, its earnings beat estimates in each of the trailing four quarters, the average surprise being 29.7%.

Q3 Estimates

Currently, the Zacks Consensus Estimate for third-quarter revenues is pegged at $810.7 million, suggesting growth of 14.7% from the year-ago reported figure. The consensus mark for earnings stands at $1.42 per share, indicating an improvement of 33.9% from the prior-year quarter.

Diagnostics Revenues: A Key Catalyst

PerkinElmer's Diagnostics segment is likely to have contributed to the to-be-reported quarter’s performance. Strength in immunodiagnostics and applied genomics business might get reflected in the segment’s third-quarter revenues.

Further, the continued rise in infectious and autoimmune diseases, especially in emerging markets, may have benefited the segment.

In July 2020, the company launched a dry blood spot (DBS)-based test for SARS-CoV-2 IgG using its GSP/DELFIA platform. The platform enables processing of up to 5,000 samples per day. The finger-prick sample collection device facilitates both decentralized sample collection and high-throughput testing. Notably, the product is being commercially rolled out as a CE-IVD test and the company intends to apply for its FDA Emergency Use Authorization (EUA) soon.

PerkinElmer, Inc. Price and EPS Surprise

PerkinElmer, Inc. Price and EPS Surprise

PerkinElmer, Inc. price-eps-surprise | PerkinElmer, Inc. Quote

In June, PerkinElmer collaborated with the world’s largest professional society of hematologists — American Society of Hematology (ASH) — to lend support to an initiative to bolster capacity for newborn screening, education and clinical interventions for sickle cell disease (SCD) in sub-Saharan Africa. Notably, PerkinElmer is a global provider of hemoglobin isoelectric focusing (IEF) technology, which helps in the detection of SCD. Further in the same month, the company added the DELFIA Xpress sFlt-1 kit to its CE-IVD pre-eclampsia product offerings. This kit will help in the short-term prediction of pre-eclampsia and enable diagnosis in the second and third trimesters of pregnancy together with the DELFIA Xpress PlGF 1-2-3 assay.

In September, the company launched the PerkinElmer Solus Listeria monocytogenes ELISA Assay, which will help high throughput food processors and contract labs focus on L. mono testing for food and environmental surface samples.

The aforementioned tests are likely to have boosted PerkinElmer’s Diagnostics business and strengthened presence in the global infectious disease diagnostics market. This, in turn, might have favored the company’s performance in the quarter to be reported.

Other Factors to Note

PerkinElmer is likely to have witnessed solid international growth in the to-be-reported quarter. Improved momentum in Europe and consistent growth trend in the United States might have contributed to the third-quarter performance.

In August, PerkinElmer announced that its Hand Sanitizer Analyzer instrument can be utilized to test the presence of methanol in alcohol-based hand sanitizer products with pass/fail results outcome delivered in 30 seconds or less. Notably, the Hand Sanitizer Analyzer is part of PerkinElmer’s comprehensive portfolio of solutions, helping lab professionals and scientists globally in their fight against COVID-19.

Also, in September, the company introduced the DA 7350 instrument and Process Plus cloud-based software to provide continuous quality control for food and food ingredient manufacturing processes.

Moreover, in the same month, PerkinElmer’s EONIS screening assay for newborns, which tests for SMA (spinal muscular atrophy), SCID (severe combined immunodeficiency) and XLA (X-linked agammaglobulinemia) simultaneously, received CE-IVD approval.

Hence, the positive impact of such developments is likely to get reflected in the third-quarter results.

Additionally, the company’s Discovery product portfolio may have witnessed strong demand courtesy of sustained robust performance by life sciences.

The company’s bottom line is anticipated to reflect organic revenue growth and better margin expansion. In fact, for the third quarter, earnings per share is expected between $1.18 and $1.53. In terms of revenues, the company projects revenues between $760 million and $860 million in the third quarter.

Productivity initiatives and volume leverage are likely to have contributed to the company’s second-quarter gross and operating margins. New product introductions might have improved product mix and thereby gross margin.

Additionally, the company has been implementing plans to invest in high-growth areas and shift the organization to a more unified structure. This, in turn, is likely to have driven operating margin expansion in the to-be-reported quarter.

However, PerkinElmer’s exposure to the international markets increases the risk of foreign exchange volatility. In fact, the company anticipates foreign exchange to affect 2020 revenues by approximately 1%. Consequently, this is likely to be reflected in the third-quarter revenues.

Here’s What the Quantitative Model Suggests

Our proven model conclusively predicts an earnings beat for PerkinElmer this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Earnings ESP: PerkinElmer has an Earnings ESP of +7.04%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: PerkinElmer sports a Zacks Rank #1.

Other Stocks Worth a Look

Here are some other medical stocks worth considering as these too have the right combination of elements to post an earnings beat this quarter.

Stryker Corporation SYK has an Earnings ESP of +0.26% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Masimo Corporation MASI has an Earnings ESP of +10.71% and a Zacks Rank of 3.

Pacific Biosciences of California, Inc. PACB has an Earnings ESP of +15.39% and a Zacks Rank of 3.

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