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Leerink Upgrades Bruker Shares to Outperform

NEW YORK (GenomeWeb) – Leerink today upgraded shares of Bruker to an Outperform rating, noting that the company's operational improvements have begun to show results and that its competitive position in the NMR market has improved significantly with Agilent's exit from this space last year.

Analyst Dan Leonard upgraded the company's stock from a previous Market Perform rating and increased the bank's price target on Bruker's shares to $24 from $21.

In a research note, Leonard said the company's various operational improvement initiatives "are beginning to bear fruit," citing the operating margin improvement Bruker has predicted for 2015 along with its reduction in working capital.

Bruker has forecast an EBIT margin expansion of 1.4 percent for 2015. Its reduction of working capital, meanwhile, is evidenced by a drop in inventory days on hand from 222 days in 2012 to 197 days in 2014.

On the NMR front, Leonard noted that communication with instrument users has confirmed that Bruker is using Agilent's exit from this space to raise prices, in some cases up to 30 percent. While these higher prices could hurt demand, Leerink believes "any dampening will be manageable and the net result for Bruker will be positive."

Leonard added that if Bruker manages a $15 million net pricing benefit in NMR in 2016, this would provide a roughly 6 percent to 7 percent "upside to current 2016 [analyst] forecasts."

In Monday morning trade on the Nasdaq, shares of Bruker were up around 3 percent at $19.42.