New Opportunity May Double BRKS Stock

BRKS Stock
Credit: iStock.com/monsitj

Brooks Automation Stock Rises on High Growth  

Today’s stock represents one of our preferred strategy of investing in stocks, which promises above-average returns to investors—investing in picks-and-shovels stocks. These picks-and-shovels stocks cater to the prevailing technology trends and such companies provide essential products and services that enjoy strong demand.

The case in point being Brooks Automation, Inc (NASDAQ:BRKS), which is a leading provider of automation and cryogenic solutions for multiple markets and applications. Its technologies help in precise, reliable handling of sensitive materials in controlled environments. The company primarily caters to the semiconductor capital equipment market. Its semiconductor business is growing on the back of demand for chips with trends like mobility, the Internet of Things, and artificial intelligence.  

Brooks is also in the sample management market for life sciences where its cryogenic solutions help its customers handle materials at very low temperatures. The company provides cold sample management storage systems and equipment to prepare and handle biological samples.

About 79% of the company’s revenue comes from the semiconductor capital equipment and about 21% comes from the life sciences sample management business. However, it is the performance and growth in its life sciences businesses that offers the chance of high returns from BRKS stock.

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With the advent of biologics and personalized medicine, biological samples have become vital assets to the success of drug and therapy pipelines. As a result, proper management and protection of these samples has gained increased importance to the company’s customers. This market is expanding as a result of an increasing number of samples being stored globally. This trend has created an attractive market opportunity for Brooks Life Science Systems to provide comprehensive sample management solutions.

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As per research by Technavio, the global biobanking market is expected to grow steadily at a compound annual growth rate (CAGR) of nine percent by 2021. The report says that one of the primary drivers for this market is the growing demand for personalized medicine. This implies treatments based on individual characteristics, which leads to the need to bank their tissues and stem cells for treatments in future. (Source: “Global Biobanking Market 2017-2021,” Technavio, March 2017.)

Brooks Automation is positioning itself well for this multibillion-dollar opportunity. It has made a number of strategic acquisitions over the last year to strengthen its portfolio. The continuous growth has led to the gradual rise in BRKS stock. The company has more than 800 customers around the globe, including a majority of the top 20 global biopharmaceutical companies. Its sample management solutions are focused on providing customers with the highest level of sample quality, security, management, and intelligence throughout the life cycle of samples.

Brooks Life Science Systems also posted strong performance in the fiscal year 2017 with annual revenue growth of 38%, with 27% organic growth. Total bookings were $189.0 million through the year.

The company recently announced impressive results for the fourth quarter. Revenue went up by 15% year-over-year and the gross margins at 41% was a new record in the last ten years. For the fiscal year 2017, revenue went up by 24% and was driven by organic growth of 22%. (Source: “Brooks Automation Reports Fourth Quarter Results of Fiscal Year Ended September 30, 2017,” Brooks Automation, November 9, 2017.)

BRKS stock has gained over 45% in the last one year and more than 150% in the last five years. Given the current growth and future potential of life science business, Brooks Automation stock is likely to post higher gains in the coming years.

brks stock chart

Chart courtesy of StockCharts.com

Analyst Take:

Brooks Automation is likely to become a stronger player in the rapidly expanding life science market, as the ever-increasing demand for samples shall require efficient and accurate management of these vast collections. The value of the sample depends on the preservation of the sample in a cold environment together with the data and information that must reliably be attached to each of these samples. And the company is doing a great job with its sample lifecycle management solutions, which bodes well for Brooks Automation stock.

Brooks Automation has been a leading partner in the global semiconductor manufacturing market, and through product development initiatives and strategic business acquisitions, has expanded its solutions and offerings to meet the needs of customers in the life sciences industry, analytical, and research markets. With the introduction of sophisticated technologies in the personalized treatment of diseases, the company stands to gain in the coming years.

BRKS stock shall soar higher with the growth in the life science industry and investors should build positions on any sign of weakness in this picks-and-shovels stock.