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Investment Banks Downgrade Bruker on Resignation of CFO

NEW YORK (GenomeWeb) – Investment banks Mizuho Securities and William Blair today downgraded Bruker's shares, following the company's announcement that CFO Charles Wagner is resigning effective June 12. 

Mizuho downgraded Bruker to a Neutral rating from a previous Buy rating, while William Blair downgraded the firm to Market Perform from Outperform. 

Mizuho analyst Peter Lawson maintained a $22 price target on the stock and noted in a research note that Bruker's shares have already hit his price target and he is hard-pressed to increase the valuation multiple and price target, given Wagner's impending departure. 

Wagner became Bruker's CFO about three years ago to drive margin improvement, and while the company's financial results have been "spotty with fits and starts," recent divestitures, including parts of its Chemical and Applied Markets business last summer, and internal programs had begun to show a positive effect, Lawson said. Wagner, he added, "was a central part of the margin improvement and turnaround story for the company." 

Wagner is moving to Ortho-Clinical Diagnostics as CFO and will rejoin that firm's CEO Martin Madaus, who was the CEO of Millipore when Wagner was its CFO. William Blair analyst Amanda Murphy wrote in a note that while Bruker management said that Wagner's departure is opportunistic and not the result of any disagreement with the company, investors will, nonetheless, question the timing of his resignation, particularly in light of the impending departure of Bruker BioSpin Group President Thomas Bachmann in July to become president and CEO of the Eppendorf Group. 

Wagner is "leaving quite a lot on the table, particularly if a turnaround is truly underway," Murphy said, noting that Wagner sold 19,000 shares that he had in Bruker in March. "Although presumably the opportunity at [Ortho-Clinical Diagnostics] could be lucrative, we believe [the] timing of the departure as well as [his stock sale] when the business was perceived to be at an inflection point may drive questions as to whether there are fundamental structural issues in the business." 

Anthony Mattachione will take over as CFO on an interim basis after Wagner leaves, while Bruker searches for a permanent replacement, Bruker said. 

In trading on Thursday morning on the Nasdaq, Bruker's shares were down 14 percent at $19.17.