Bruker Dropped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: On Wednesday, Bruker (Nasdaq: BRKR  ) announced Q2 results that beat on revenues, missed on earnings, and did little more than meet expectations on guidance for the rest of the year. Investors reacted by selling off the stock 12%.

So what: No huge surprise there. At 27 times earnings, Bruker was priced for some pretty heady growth. Wall Street analysts were predicting only 18% annual earnings growth however, so it seems likely that investors were looking for a beat and a raise -- rather than the mixed bag of beats, meets, and misses that Bruker handed them.

Now what: Even so, I'd think twice before joining in on the sell-off on this stock. According to management, Bruker grew its revenues 31% year over year in the first half of 2011. Bookings of new business at the scientific-instruments maker, however, are up an astonishing 50%. This suggests that as fast as Bruker grew in the first half, it may grow even faster going forward.

Earnings aren't currently keeping up with that growth rate (up just 25% in the first hald), but if management keeps expanding gross margins, as it seems to be suggesting it will do, we could see Bruker outrun both Wall Street's expectations and its own guidance in the quarters to come.

Like the growth story at Bruker? Want to see how it turns out? Add the stock to your Fool Watchlist and read along with us.