On Jun 8, we issued an updated research report on Radnor, PA-based VWR Corporation (NASDAQ:VWR) . The company offers laboratory products, services and solutions and currently carries a Zacks Rank #3 (Hold).
VWR had a remarkable start to 2016, with its first-quarter financial numbers beating the Zacks Consensus Estimate on both the top and bottom line. Segment-wise, management witnessed strong sales in both Americas as well as the EMEA-APAC region, accompanied by exceptionally strong growth in equipment and instrumentation.
Per management, robust growth in biotech, medical devices and sales to CRO customers drove the better-than-expected performance of the biopharma business in the Americas during the first quarter. Moreover, the strategic shift from the company’s North American regional go-to-market strategy to a customer segment-specific approach has started to add value. Going ahead, VWR expects to witness continued solid business momentum in the Americas segment in the second quarter as well.
In the EMEA-APAC region, the company witnessed a reduced impact of currency translation on segment sales in the first quarter, which in turn significantly boosted its performance. From a product perspective, sales of chemicals grew in the low single digits, consumables rose mid single digits while capital goods increased low single digits.
The company’s stable cash balance position as well as its huge customer base added to the optimism.
On the flip side, the company continues to face gross margin pressure. Escalating cost of production has been a major factor behind this lackluster outcome. Moreover, as VWR offers products from a wide range of suppliers, its ability to sustain its gross margin has been, and will continue to be, dependent partly upon its ability to obtain favorable terms from its suppliers.
Unfavorable currency fluctuation continued to impact the company’s overall sales in the first quarter and management expects no respite from the same in the near term. Intensifying competition is also a headwind for the stock.
Key Picks in the Sector
Some better-ranked stocks from the same sector are The Cooper Companies Inc. (NYSE:COO) , Henry Schein, Inc. (NASDAQ:HSIC) and Laboratory Corp. of America Holdings (NYSE:LH) . All three stocks carry a Zacks Rank #2 (Buy).
HENRY SCHEIN IN (HSIC): Free Stock Analysis Report
LABORATORY CP (LH): Free Stock Analysis Report
COOPER COS (COO): Free Stock Analysis Report
VWR CORP (VWR): Free Stock Analysis Report
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