Shares of PerkinElmer (PKI 0.11%) fell 14.4% in January, according to data from from S&P Global Market Intelligence. The company specializes in medical diagnostic, food, environmental, and industrial testing, plus life science research. The stock closed at $201.06 on Dec. 31, opened the new year at $199.43, and fell to a low of $162.20 on Jan. 28.
PerkinElmer released preliminary fourth-quarter and 2021 fiscal year numbers on Jan. 11. The company said it expected reported fourth-quarter revenue to be down 1% year over year compared to the same period in 2020.
In the four quarters prior, PerkinElmer had declining revenue each quarter, so it's understandable that investors may have feared another quarterly drop. The funny thing is, when the actual numbers for the fourth quarter came out on Feb. 1, they were better than expected, but by then, the damage had been done to the stock's price.
The company's fourth-quarter revenue was $1.36 billion, up 0.007% year over year; its annual revenue was $5.067 billion, up 33.9% over 2020; and its yearly earnings per share (EPS) were $7.99, up from $6.50 in 2020. PerkinElmer has now had seven consecutive years of increased revenue, two consecutive years of increased EPS, and seven consecutive years of increased earnings before interest, taxes, depreciation, and amortization (EBITDA).
There are a few warning signs, though. The company operates in two segments: diagnostics and discovery and analytical solutions. While discovery and analytical solutions thrived in the fourth quarter, the diagnostics segment, which includes COVID-19 assays, slumped with $709 million in revenue in the quarter, compared to $852 million in the same period last year. The company has several COVID-19-related products, including high-throughput RNA extraction, RT-PCR assays, automated liquid handlers, integrated workstations, rapid antigen tests, and serology tests.
On top of that, the company said it expects overall full-year EPS in 2022 to be between $6.80 and $7, compared to $7.99 in 2021, and that full-year 2022 revenue would be between $4.42 billion and $4.5 billion, a drop of 12.8% to 11.2% year over year.
PerkinElmer may certainly be impacted by reduced revenue as the pandemic ebbs, though the need for COVID-19 testing won't go away completely.
The healthcare diagnostics company does have at least one area where it should still grow, as it supplies tools for biotech companies to modulate and edit genes, as well as tools to help with genetic material payloads for gene therapies.
PerkinElmer's forecast of reduced revenue for 2022 is a good reason the stock is down 9% for the year. However, at this point, those concerns may already be baked into the stock's price. The company also forecasts a strong 2023, so the stock's decline may provide a temporary opportunity for a patient investor.