PKI - PerkinElmer retraces gains as BofA downgrades citing valuation

• Following an earnings-led rally yesterday, the shares of life sciences company PerkinElmer, Inc. ( NYSE: PKI ) traded lower in the morning hours Tuesday after Bank of America downgraded the stock to Neutral from Buy citing limited upside potential.
• However, the analyst Derik de Bruin and the team welcome the company’s decision to raise full year guidance and divest Applied, Food and Enterprise Services businesses to New Mountain Capital for nearly $2.5B.
• “PKI is shedding segments that were either non-core (Applied, Food), lower margin (Enterprise Services), or where the company faced stiff competition (Analytical Instruments),” they added.
• The remaining company consisting of life sciences & diagnostic tools units is poised to have higher growth and profitability than the company’s legacy business, BofA noted noting that the move will allow the management to focus on more attractive opportunities.
• However, the analysts note that the PerkinElmer’s ( PKI ) current valuation already reflects sizable multiple expansion with limited upside potential from the current position.
• The price target set to $160 per share stands ~4% higher than the current average price target for the stock on Wall Street.

For further details see: