Q2 Earnings Preview: Groundhog Day?

Research evidence excerpt

Q2 Earnings Preview: Groundhog Day?

$13.00

(with uptake of new and innovative launches in areas like GC, LC, and MS).

Veracyte Inc (VCYT.O) From To

Biopharma funding remains robust and we'd expect more direct commentary from Price Target $37.00 $47.00

core tools players on customer spend this quarter, considering the typical lag we've

Waters Corporation (WAT.N) From To

seen historically. Moderating cost inflation and stronger PMIs read positively for Price Target $350.00 $390.00

applied and industrial customers, while we'd expect limited change in customer West Pharmaceutical Services

spend from the academic and government market, particularly within the US. Inc. (WST.N) From To

Price Target $325.00 $365.00

Investor interest in core tools is picking up per our discussions as the collective

bucket has re-rated from intra-quarter lows, though we continue to sense hesitancy

in select cases given the stop/start rhetoric of years prior. For CROs, broader

positive competitive commentary has also driven a re-rating to more respectable

levels in our view, but sets a higher bar into Q2 irrespective of positioning. To that

point, investor preference remains with preclinical CROs over clinical stage

companies from our discussions. Finally, in diagnostics, evolving catalysts

(particularly for GH) appear to have driven multiple expansion across the group,

with several names now trading at five-year highs.

Names we like heading into the coming quarter: While the long call didn't work

out last quarter, we think more sensible buyside expectations paired with healthy

visibility across core businesses creates an attractive setup for TMO, while the stock Morgan Stanley does and seeks to do business with

companies covered in Morgan Stanley Research. As a result,