ZACKS CONSENSUS ESTIMATES

February 03, 2015

PerkinElmer Inc.

Current Recommendation Prior Recommendation Date of Last Change

NEUTRAL

Underperform 09/18/2013

Current Price (02/02/15) Target Price

$45.59 $48.00

SUMMARY DATA

52-Week High 52-Week Low One-Year Return (%) Beta Average Daily Volume (sh)

Shares Outstanding (mil) Market Capitalization ($mil) Short Interest Ratio (days) Institutional Ownership (%) Insider Ownership (%)

Annual Cash Dividend Dividend Yield (%)

5-Yr. Historical Growth Rates Sales (%) Earnings Per Share (%) Dividend (%)

P/E using TTM EPS P/E using 2015 Estimate P/E using 2016 Estimate

Zacks Rank *: Short Term 1 3 months outlook

* Definition / Disclosure on last page

$48.25 $39.83

5.18 0.92 1,093,834

113 $5,150

6.14 91 3

$0.28 0.61

4.9 13.2

0.0

18.5 17.5 15.7

3 - Hold

(PKI-NYSE)

SUMMARY

PerkinElmer reported strong fourth-quarter 2014 results wherein both earnings and revenues beat their respective Zacks Consensus Estimates and also showed healthy year over year growth. The company continued to execute strongly across several product lines aided by rebounding markets and cost containment efforts. With an increased focus on product innovation and improving end-market trends, PerkinElmer has potential upside going forward. Accretive acquisitions and strategic collaborations are also expected to drive growth in 2015 and beyond. However, unfavorable foreign exchange and product mix are nearterm concerns. Moreover, weak European economy continues to be a challenge for 2015. Given the mixed signals, we maintain Neutral recommendation and set a target price of $48.00.

Risk Level * Type of Stock Industry Zacks Industry Rank *

Low, Large-Blend Instru-Scientfc 198 out of 267

ZACKS CONSENSUS ESTIMATES

Revenue Estimates

(In millions of $)

Q1

Q2

(Mar)

(Jun)

2013 505 A

543 A

2014 532 A

556 A

2015 539 E

569 E

2016

Q3 (Sep) 524 A 542 A 562 E

Q4 (Dec) 593 A 608 A 636 E

Year (Dec) 2,166 A 2,237 A 2,306 E 2,424 E

Earnings Per Share Estimates

(EPS is operating earnings before non-recurring items, but including employee stock options expenses)

Q1

Q2

Q3

Q4

Year

(Mar)

(Jun)

(Sep)

(Dec)

(Dec)

2013 $0.36 A $0.51 A $0.49 A $0.73 A $2.08 A

2014 $0.46 A $0.59 A $0.57 A $0.85 A $2.47 A

2015 $0.47 E $0.62 E $0.61 E $0.91 E $2.61 E

2016

$2.90 E

Projected EPS Growth - Next 5 Years %

13

? 2015 Zacks Investment Research, All Rights reserved.



10 S. Riverside Plaza, Chicago IL 60606

RECENT NEWS

Fourth Quarter 2014 Highlights

PerkinElmer reported fourth-quarter 2014 EPS of $0.85, which surpassed the Zacks Consensus Estimate by $0.07. EPS increased almost 15% year over year driven by 2.7% increase in revenues, which totaled $608.6 million. The revenue figure was also much better than the Zacks Consensus Estimate of $602 million.

Moreover, operating margin expansion of 200 basis points (bps), which was primarily attributed to 110 bps and 50 bps drop in selling, general & administrative (SG&A) expenses and research & development (R&D) expenses, respectively, drove the bottom line.

SG&A expense reduction came on the back of the positive impact of productivity initiatives. Meanwhile, the R&D improvement can be attributed to efficiencies resulting from the consolidation of PerkinElmer s R&D activities and research Center for Innovation in Hopkinton.

Segment Details

Organic revenue growth stood at 5% while acquisitions added 1%, partially offset by unfavorable foreign exchange impact of 3% in the quarter. Organic revenues increased high-single digits in the Americas and mid-single digits in both Europe and Asia. China revenues also grew at a mid-single digit rate.

Human health segment revenues remained almost flat at $336.4 million, while Environmental health increased 5.8% to $272.2 million in the quarter.

In early January, PerkinElmer announced that OneSource service group will now be part of Human Health business. With the predominant OneSource customer base being in the pharma and biotech markets, this realignment will help the company efficiently serve its life science customers going forward.

Diagnostics grew in mid-single-digits as PerkinElmer continues to benefit from higher demand for the company s newborn and prenatal screening and infectious disease testing solutions in the emerging markets.

Research business increased low single digits driven by a number of new product introductions like Opera Phenix, EnSight and Touch, as well as improved demand for innovative automation, quantitative technology and informatics platforms.

Environmental Health organic revenues increased high-single digits in the quarter, driven by strong demand in both food and safety end markets, with particular strength from the ICP-MS product portfolio and continued strength at other service offerings.

During the quarter, the company announced the opening of PerkinElmer's state-of-the-art clinical testing lab in Suzhou, China. This new facility will offer a complete solution for hospitals and patients and support the country's investments toward detection and prevention of birth defects and infectious diseases.

Human health segment s operating margin expanded 300 bps, while Environmental health margin remained flat on a year-over-year basis in the quarter. Productivity initiatives, volume leverage and prudent sales mix drove the margin improvement.

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Product/Clinical Update

During the quarter, PerkinElmer received approval from both the FDA and Health Canada to offer the first commercially available newborn screening test for SCID in the U.S. and Canada.

Acquisitions

During the fourth quarter, the company announced the acquisition of Perten Instruments Group, a leading supplier of analytical instruments for quality control of food, grain, flour and feed.

Outlook

At cc, PerkinElmer forecasts top-line growth of 6% to 8%, with organic revenue growth of 3% to 5% for 2015. Acquisitions are expected to contribute 3% to revenues. The company expects the impact of the stronger dollar to reduce revenues by about $100 million. Consequently, PerkinElmer s reported revenue guidance is pegged at $2.28 billion to $2.32 billion, which reflects 2% to 4% growth over 2014.

On a geographic basis, APAC is stable, with China experiencing continued growth in diagnostics and modest recovery in the research, environmental and industrial markets. Weak European economy continues to be a challenge for 2015. The U.S. economy, on the other hand, is improving, although the stronger dollar is creating new challenges, especially in emerging markets.

Regarding end markets, pharma is stabilizing as customers move back into development mode. Management expects to see strong biotech growth for Europe and the U.S. in 2015.

PerkinElmer is well positioned to benefit from investments in the area of cancer immunotherapy as well as the rising trend of outsourcing instrument maintenance and scientific services. The academic and government sectors are most likely to stay flat with the 2014 level, owing to soft funding in the U.S. and severity in Europe.

In the environmental and industrial markets, revenue growth is expected to remain flat similar to the second half of 2014, depending on impending global environmental regulations and macro GDP growth rates.

PerkinElmer is optimistic about the rapidly expanding food market, which has become one of the fastestgrowing segments of the analytical instruments sector. Additionally, the global diagnostics markets continue to be significant revenue drivers, owing to higher U.S. birth rates, prenatal and neonatal screening menu expansion and the long-term emerging market demand, especially in China.

In 2015, Environmental Health business is forecasted to benefit from a robust pipeline, products from which will be launched in the first half and gain scale in the second half of 2015.

Management expects modest increases in R&D spending throughout 2015 as the company continues to invest in innovative product development. For 2015, PerkinElmer believes that it can grow adjusted EPS in the range of 11% to 13% at cc. However, a stronger dollar is expected to hurt EPS by $0.15. Consequently, PerkinElmer provided adjusted EPS range of $2.58 to $2.64, which represents growth of roughly 5% to 7% over 2014.

For the first quarter of 2015, management forecasts reported revenues in the range of $530 million to $540 million or essentially flat year-over-year, but projects organic revenue growth of 3% to 4%.

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Taking into account the flat revenue guidance, combined with the impact of the timing of sales recognized in the fourth quarter, PerkinElmer expects adjusted EPS in the range of $0.44 to $0.46 for the quarter.

VALUATION

PerkinElmer shares are trading at 18.5x TTM earnings, a discount to the peer group average of 26.2x but a premium to the S&P 500 average of 18.3x. The TTM multiple is higher than the mid-point of the historical range of 11.2x to 21.8x TTM earnings, indicating limited upside potential.

The stock is trading at 17.5x our forward earnings estimates for 2015, a 10% discount to the peer group average of 19.4x, which is lower than the 54% average discount for the historical period, indicating downside risk.

However, innovative product pipeline, improving end-market trends, accretive acquisitions and strategic collaborations are major positives over the long term.

Given the mixed signals, we maintain our Neutral recommendation and set a price target of $48.00 (18.4x 2015 earnings).

Key Indicators

PerkinElmer Inc. (PKI)

P/E F1

17.5

P/E F2

15.7

Est. 5-Yr EPS Gr%

12.8

P/CF (TTM)

12.9

P/E (TTM)

18.5

P/E 5-Yr High (TTM)

21.8

Industry Average S&P 500

19.4 17.5

11.4

15.9 14.9

10.7

19.5 26.2 150.0 15.0 18.3 19.4

Mettler-Toledo International Inc. (MTD)

23.6 21.0

12.3

23.5 26.8 26.7

Waters Corporation (WAT)

21.0 19.2

9.2

20.8 21.6 22.9

Bruker Corporation (BRKR)

23.1 19.5

11.2

16.6 24.5 29.5

TTM is trailing 12 months; F1 is 2015 and F2 is 2016, CF is operating cash flow

P/E 5-Yr Low (TTM)

11.2

14.4 12.0

17.5 15.4 14.4

PerkinElmer Inc. (PKI)

P/B Last Qtr.

2.4

P/B 5-Yr High

2.6

P/B 5-Yr Low

1.1

ROE (TTM)

13.1

D/E Last Qtr.

0.5

Div Yield Last Qtr.

0.6

EV/EBITDA (TTM)

18.5

Industry Average

4.2

4.2

4.2

-5.9

0.3

0.3

11.7

S&P 500

5.1

9.8

3.2

24.8

N/A

2.0

N/A

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Earnings Surprise and Estimate Revision History

NOTE: THIS IS A NEWS-ONLY UPDATE; THE REST OF THIS REPORT HAS NOT BEEN UPDATED YET.

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