NEW YORK (GenomeWeb News) – Investment bank Cowen & Co. today upgraded PerkinElmer's stock, citing favorable end-market exposure and year-over-year comparisons that could result in mid-single digit revenue growth in 2014.
Analyst Doug Schenkel upgraded the company's stock to Outperform from Market Perform, and increased the price target on its shares to $47 from $35.20.
In afternoon trading on Monday, PerkinElmer's shares on the Nasdaq was up 1 percent to $41.68.
In a research note, Schenkel noted that investment analysts have lowered the company's consensus EPS estimates to $2.06 from $2.31 for 2013 and to $2.41 from $2.66 for 2014. That, in addition to an expansion in PerkinElmer's price/earning multiple to about 19x from 14x, "explains why PerkinElmer underperformed vs. peers."
The potential upside to the recent underperformance, he continued, is that year-over-year comparisons "are pretty favorable" for 2014, while its shares continue to trade at a 9 to 10 percent discount to the peer group P/E multiple.
Schenkel said that the firm has favorable in vivo imaging comparisons, and added that other tailwinds in the coming year include the reversal of export inspection issues and an improvement in foreign currency-related challenges, which should lead to revenue growth. The company's environmental, pharma outsourcing, and newborn screening businesses also are likely to drive revenue growth, he said.
Lastly, he added that PerkinElmer has above average exposure to two end markets that he views as favorable in 2014, applied/industrial and biopharma.
"The combination of products and services that are well-positioned toward improving end markets and favorable [year-over-year] comparisons lead us to conclude [PerkinElmer's] likely revenue growth will improve to at least [mid-single digit] levels in 2014," Schenkel said.