BRKS - This Cold Stock Might Be Ready to Heat Up
Brooks Automation (NASDAQ: BRKS) knows how to stay cold. Among other things, it engineers cryogenic equipment -- machines that keep drug samples super cold for storage and purity purposes. After years of hot-and-cold spells for its shares, Brooks has been taking small but frequent steps away from its legacy semiconductor business, and into its future as a life sciences company. These could be the early days of a major transformation for Brooks Automation -- and the thawing of a once-frozen stock.
Brooks Automation, founded in 1978, cut its teeth serving large semiconductor companies -- operations that still represent about 56% of the company's revenue. Brooks's niche in the large and complex semiconductor world are "vacuum robots" ... but not in the sense of iRobot's Roombas. These robots operate in a vacuum -- as in, "the vacuum of space" -- to prevent dust and other impurities from finding their way into the nooks and crannies of computer chips.
This business is still strong. Its revenue grew 11% year-over-year in the first quarter of 2020. But competition is fierce. Brooks lists a number of large companies, particularly Japanese consortiums, as its primary competitors on its annual report. The company also lists its own customers as competition, since many often chose to build and implement their own automation solutions. It's no wonder then, that Brooks has been intentional in its strategy of diversifying away from the semiconductor industry and into the fast-growing life sciences business.