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Key Factors to Influence PerkinElmer's (PKI) Q3 Earnings

PerkinElmer, Inc. PKI is expected to release third-quarter 2017 results on Nov 2, after the closing bell. In the last quarter, the company registered adjusted earnings of 67 cents per share, in line with the Zacks Consensus Estimate. Furthermore, adjusted revenues of approximately $547.1 million lagged the Zacks Consensus Estimate of $552.0 million.

PerkinElmer’s decision to restructure its Discovery & Analytical Solutions or DAS and Diagnostics segment holds promise for the third quarter. Furthermore, the company’s divestiture of the Medical Imaging segment in the last quarter is expected to impact earnings this season.

Let’s take a look at how things are shaping up prior to the third-quarter earnings announcement.

PerkinElmer, Inc. Price and Consensus


PerkinElmer, Inc. Price and Consensus | PerkinElmer, Inc. Quote

Factors to Consider

View Upbeat: The Zacks Consensus Estimate for PerkinElmer’s third-quarter earnings stands at 73 cents per share, signifying year-over-year growth of 6.8%. For revenues, the consensus estimate stands at $552.4 million, up 8% year over year.

For the third quarter of 2017, PerkinElmer projects revenues in the range of $550 million to $555 million, which represents organic revenue growth of approximately 5%. Third-quarter 2017 adjusted earnings per share are expected in the range of 71 cents to 73 cents.

Solid Global Foothold: PerkinElmer has been developing biochemical and molecular testing menu to meet the needs of pharmaceutical companies and serve the markets of China and India. In the last quarter, the company won two newborn-screening tenders in Russia and Mexico. Added to this, strong demand from the China Laboratory business launched last year is expected to yield solid results in the quarter to be reported.

PerkinElmer also acquired Goa, India-based Tulip Diagnostics Private Ltd for an undisclosed amount. Although Tulip was acquired in early January, we are bullish about the buyout as it will help PerkinElmer tap into the opportunities in the emerging market of diagnostics. The takeover is also likely to strengthen PerkinElmer’s foothold in the infectious disease testing space.

Foreign Exchange Volatility: Increasing exposure to the international market increases the risk of foreign exchange volatility. Foreign exchange posed a headwind of approximately 1% to the top line in the last quarter. Fluctuations in currency exchange rates can adversely impact the company’s international sales. Due to the sluggish European economy, revenues and earnings are likely to be affected adversely this season.

Our quantitative model does not conclusively show an earnings beat for PerkinElmer this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates. This is not the case here, as you will see below.

Zacks ESP: Earnings ESP for PerkinElmer is -0.83%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: PerkinElmer carries a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, the company’s negative ESP makes surprise prediction difficult.

Here are a few medical stocks worth considering as they have the right combination of elements to post an earnings beat this quarter.

INC Research Holdings, Inc. INCR has an Earnings ESP of +1.74% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Penumbra, Inc. PEN has an Earnings ESP of +31.82% and a Zacks Rank #3.

Henry Schein, Inc. HSIC has an Earnings ESP of +1.00% and a Zacks Rank #3.

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