Bruker - Reflections on Q2 2025
"Too many surprises to have an expectation"
Friends of NFTBC. BRKR gave us their second quarter earnings yesterday, having already given us preliminary results in late July. You can find the presentation slides here.
As a reminder, here’s what I wrote in the deep dive, back in April:
there are two principal bogeymen on the scene, as I write. The first is announced cuts in grants awarded by the NIH and questions around what happens to the NIH’s budget from here. With higher than average exposure to academic and government end markets, BRKR has long been a popular punching bag for short sellers when questions around the NIH arise - I won’t deny it’s a strategy that works. The second is the implementation of wide-ranging border tariffs in the US and the threat of reciprocation. My intention is to address these concerns much later on - my ambition with this note is that it will hopefully still be relevant to someone picking it up in three or four years and neither do I wish to send my readers to sleep so early on. Clearly the volatile emergence of a new US regime is going to shake things up a bit, so perhaps there’s further still for the shares to fall. I just don’t know. And perhaps BRKR will have to revise down or pull their guidance for the year (although Q1 preliminary revenue came in stronger than expected). But I do believe that this extraordinary business has a vital role to play in the world and that its management will be able to adapt, come what may.
As it turns out, for the reasons highlighted above, BRKR did have to revise down guidance in Q1 - I covered this in an earlier post. And now, in Q2, guidance has been cut again:
As you might expect, BRKR stock is getting the full ‘beauty contest’ treatment as a result - negative earnings momentum and lack of visibility are not a popular combination in this market. With hindsight, management were clearly too optimistic with the guidance reset at Q1, which they also characterised as a floor with upside. But then again, BRKR was still performing strongly at that stage. Since Q1 the US academic and government research funding crisis has continued to worsen sharply - in H1 2025 BRKR estimates NIH funding to be down around 15%, with the brunt of that in Q2. Additionally, only in the last couple of weeks has the tariff situation started to resolve, or at least gain further clarity. In such an uncertain environment, BRKR saw a significant decrease in orders for high-end research instruments from pharma and industrial customers in the US, as well as ongoing delays from the release of stimulus money to Chinese academic customers.
For his part, BRKR’s CEO Frank Laukien highlighted what they can and can’t control - and the good news is that it’s not all bad news.
