Morningstar | PerkinElmer's 3Q Results Mostly Meet Our Expectations Despite a Minor Bottom-Line Guidance Cut
PerkinElmer's third-quarter performance mostly tracked our expectations. We do not anticipate any major changes to our fair value estimate after we update our assumptions, and we are leaving our no-moat rating intact. Management lowered its 2018 adjusted EPS outlook by $0.05 to $3.60 (versus our prior forecast of $3.65) largely due to foreign exchange headwinds. Despite the bottom-line guidance reduction, broad end market strength prompted the company to lift its full-year core organic revenue growth guidance to 6.5% (up from its prior 6% forecast) which still lines up with our expectations.We expect the company's diagnostic segment will continue to realize high-single-digit revenue growth. The segment experienced quarterly 7% organic revenue growth versus the year ago period, driven by infectious and autoimmune disease segments in emerging markets. The company's Tulip diagnostic business held double-digit growth during the quarter, and we expect the business to provide continued benefit to its Indian operations. Separately, we remain encouraged by the company's Euroimmun business, which saw 11% core revenue growth.
PerkinElmer's discovery and analytical solutions business continues to boost the company's overall results. The segment posted 7% core organic revenue growth compared with the year-ago period thanks to broadly healthy end markets. PerkinElmer's food business maintained solid results, and while the company briefly discussed a potential opportunity in the burgeoning legal cannabis market, we are skeptical that it could quickly become a significant growth driver for the business. Meanwhile, the company's life science business maintained its strength in pharmaceutical and biotechnology end markets, where we expect growth to persist thanks to healthy drug discovery spending levels.
PerkinElmer is a provider of products, services and solutions for the diagnostics, life sciences and applied markets. The company operates in the following segments: Discovery and Analytical Solutions and Diagnostics. The company's Discovery and Analytical Solutions segment serves the life sciences and applied markets. The life sciences market consists of the life sciences research market and laboratory services market whereas the applied markets consist of environmental, food and industrial markets. In its Diagnostics segments, the company provides instruments, reagents, assay platforms, and software to hospitals, medical labs, clinicians, and medical research personnel to help improve the health of families.
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