HomeMost PopularInvestingExpanding Horizons: Exploring Stocks in the Booming Scientific Instruments Industry

Expanding Horizons: Exploring Stocks in the Booming Scientific Instruments Industry

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The Zacks Instruments – Scientific industry is riding high with the surge in healthcare spending, fueled by the aging demography, and continuous breakthroughs in the pharma and life sciences markets. The increasing demand for generic drugs and biosimilars is propelling the growth of scientific tool and apparatus providers. Leading industry players, such as Mettler-Toledo International MTD and Bruker BRKR, are reaping rewards from the escalating testing needs of cutting-edge biological drugs. The industry is also experiencing a spike in demand for automated solutions that ensure compliance. However, the sector is grappling with challenging macroeconomic conditions, with unfavorable PMI readings in Europe and ongoing conflicts in Ukraine and the Middle East.

Decoding the Industry’s Characteristics

The Zacks Instruments – Scientific industry encompasses companies offering scientific instruments, analytical tools, diagnostic solutions, precision instruments & services, and test & sensor solutions. Key markets served by the industry participants include life science research in academia, pharmaceuticals and biotechnology, microbiology and diagnostics, nanotechnology, and materials science research. Some companies also cater to the food and nutritional safety, biochemical, and industrial sectors. The industry is subject to stringent global regulatory scrutiny and compliance.

3 Defining Trends Shaping the Future of the Instruments-Scientific Industry

Strong End-Market Demand: The industry is witnessing robust end-market demand, particularly from the life science, pharmaceutical and academic sectors. The escalating need for generic drugs and biosimilars is steering growth for scientific tool and apparatus providers. Pharma companies are deeply invested in burgeoning areas like proteomics and phenomics, biopharma and applied, microbiology and diagnostics, and neuroscience and cell microscopy, creating substantial demand for the instruments offered by industry participants.

Aging Demography Driving Spending: Socioeconomic factors such as aging populations and heightened environmental regulations are fueling the demand for scientific measurement solutions. Solid healthcare spending globally serves as a major growth catalyst.

Emerging Market Prospects Solid: The industry is capitalizing on the increasing exposure to developing economies like China and India. China, in particular, holds immense potential as regulators strive to elevate the country’s biopharma industry to global standards. The country’s endeavors to enhance the drug development process and production quality, along with substantial investments in areas like lithium-ion batteries and biopharma, are driving prospects. The growing need for automation is a long-term driver in China, resulting in heightened demand for instruments.

Industry’s Optimal Rank Indicates Bright Prospects

The Zacks Instruments – Scientific industry belongs to the broader Zacks Computer and Technology sector and holds a Zacks Industry Rank #8, placing it in the top 3% of more than 250 Zacks industries. The industry’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bullish short-term prospects. Research indicates that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor exceeding two to one.

The industry’s positioning in the upper 50% of the Zacks-ranked industries comes on the back of a positive earnings outlook for the constituent companies in aggregate. Considering the collective earnings estimate revisions, analysts hold an optimistic view regarding this group’s earnings growth potential. Since Nov 30, 2023, the industry’s earnings estimates have surged by 3%.

Given the promising near-term outlook, certain stocks within the industry are worth observing. Prior to presenting those stocks suitable for your portfolio, let’s delve into the industry’s recent stock-market performance and valuation panorama.

Industry Trails Sector and S&P 500

The Zacks Instruments – Scientific industry has lagged behind the broader Zacks Computer and Technology sector and the S&P 500 composite over the past year. During this period, the industry has seen a 10% decline, unlike the S&P 500’s 25.9% surge and the broader sector’s 48.9% leap.

One-Year Price Performance

is perf 20240220

Industry’s Current Valuation

Based on the forward 12-month P/E, a commonly deployed multiple for valuing scientific instrument stocks, the industry is presently trading at 28.76X compared with the S&P 500’s 20.71X and the Zacks Computer and Technology sector’s 21.29X.

Over the past five years, the industry has traded as high as 32.33X and as low as 22.03X, with a median of 27.53X, as illustrated in the charts below.

Forward 12-Month Price-to-Earnings (P/E) Ratio

is val 20240220

 

is val2 20240220

 

2 Scientific Instruments Providers to Watch Out For

Mettler-Toledo: This Zacks Rank #2 (Buy) company is reaping the benefits of strong momentum in its food retail segment. Its growing presence in Europe and the Americas remains a positive factor. Portfolio strength, cost-cutting measures, robust sales and marketing strategies, benefits from investments in Spinnaker sales, and field resources are contributing significantly. Additionally, robust demand across pharmaceutical and life science markets is adding to its lure. The shares of this Polaris Parkway, Columbus-based company have witnessed a 2.1% decline in the year-to-date period. The Zacks Consensus Estimate for MTD’s current-year earnings has increased by 0.9% to $39.79 per share in the past 30 days.

Price and Consensus: MTD

mtd 20240220

 

Bruker: This Billerica, MA-based company is surging ahead with its innovative


Bruker Corporation Continues Growth Trajectory

Bruker Corporation Continues Growth Trajectory with Addition of BCA

The scientific and industrial instruments industry has been abuzz with the recent announcement of Bruker Corporation’s acquisition of BCA, previously known as PhenomeX. The move comes as Bruker continues its trajectory of delivering excellent organic growth and ramps up investments in the dual strategy of Project Accelerate 2.0 initiatives and operational excellence.

Synergistic Complementarity

The addition of BCA to Bruker’s portfolio complements its existing cellular and sub-cellular analysis tools, presenting a myriad of opportunities for commercial synergies. This strategic acquisition is poised to bolster Bruker’s position within the industry and enhance its product offerings, thus laying the foundation for sustained growth and innovation.

Financial Outlook

The Zacks Consensus Estimate for Bruker’s current-year earnings has seen an increase, reaching $2.74 per share over the past 30 days. Moreover, shares of this Zacks Rank #2 company have displayed impressive performance, marking an 11.4% gain year to date, signaling favorable prospects for investors and stakeholders.

Price and Consensus: BRKR

brkr 20240220

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Harnessing the momentum of its recent success, Bruker’s latest strategic move has bolstered its position within the industry and stirred considerable interest among investors. As the company forges ahead, this acquisition is positioned to deliver commendable value, driving its growth trajectory ever higher.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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