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Cowen analysts upgraded shares of PerkinElmer (NYSE:PKI) to Outperform from Market Perform, cutting the price target to $164 from $192 in a note Tuesday.
They said the firm is positive on PerkinElmer’s fiscal 2023-25 growth and profitability potential.
“KI expects to generate a cumulative ~$3.21B+ in COVID-related revenues between 2020 and 2022. Since 2020, PKI has deployed COVID cash for 7+ key acquisitions and announced the divestiture of ~$1.3B in lower-margin revenues (resulting in a ~35% workforce reduction). We believe PKI is still considered a ‘show me’ story, and we come away from recent management meetings with increased confidence around the potential for upward revisions to FY’23-25 growth and profitability expectations,” the analysts wrote.
They also said other key drivers of the upgrade include the company coming away from recent management meetings with increased confidence around the stability and growth within the company’s newborn screening business and the fact that PerkinElmer is trading at a 16.2% discount to their peer average 2024 P/E multiple.
In addition, Cowen sees the “potential for BioLegend’s revenue growth and margin profile to drive upside to 1) out-year consensus expectations and 2) PKI’s FY’24-26 targets.”
“BioLegend’s estimated $380M in 2022 revenues represents a 2019-2022 growth CAGR of roughly +18%, despite adverse headwinds from the pandemic. We estimate BioLegend’s FCF margins to be in the low 50s range (well above PKI’s total company average), and we model BioLegend to represent 16.4% of FY’25 revenues (vs. 8.3% in FY’22),” they added.
