BRKS - Embedded Expectations Analysis - 2020 10 15
Brooks Automation, Inc. (BRKS:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) earnings, with a 27.0x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may have concerns about the potential of their GENEWIZ and RURO acquisitions, their life sciences business, and their ability to sustain overall growthSpecifically, management may lack confidence in their ability to sustain life sciences services revenue and growth, particularly in GENEWIZ, support cell and gene therapy through next generation sequencing (NGS), and further generate profitability synergies throughout the business. Furthermore, they may have concerns about the potential of their RURO acquisition and their ability to maintain growth in areas affected by the coronavirus pandemic. Management may also lack confidence in their ability to sustain strong growth and margins for the semiconductor business, continue securing design wins, and maintain the strength of their foundry drivers
Brooks Automation provides semiconductor manufacturing automation solutions and life science sample-based services and solutions worldwide. In the semiconductor manufacturing market, the company provides robotics, automation systems and services. In the life sciences market, the company provides sample-based services and products, including a line of cold chain management solutions for handling and storing biological and chemical compound samples used in areas such as drug development, clinical research and advanced cell therapies. The company is also a provider of gene sequencing and gene synthesis services. The company's reportable segments consist of Brooks Semiconductor Solutions Group and Brooks Life Sciences.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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