PKI—I found the explanations for the revenue and EPS miss on yesterday’s CC unconvincing, and I’m re-evaluating whether to hold or take profits (my average cost is <$20).
The case for selling is that the quarterly miss might not be a one-off event and could signify increased competition in some of PKI’s markets. Unlike IBM and MMM (which also had bad quarters in 1Q13), PKI does not have a longstanding track record of great performance to point to as a reason for considering the bad result an anomaly.
On the other hand, one of my reasons for owning PKI is the buyout vig from consolidation in the scientific tools sector. Paradoxically, the weak 1Q13 performance and consequent decline in the share price increases the probability of a buyout.
Moreover, PKI continues to deliver impressive growth in emerging markets, especially China, and hence is consistent with the investing theme of benefitting from The Global Demographic Tailwind.
Bottom line: I will probably hold, but I’m still thinking about it.
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