Bernstein: Revvity's third-quarter growth beats expectations as improving demand meets valuation pressure

What drove the third-quarter beat?

Revvity reported third-quarter pro forma revenue of 709.6 million dollars, above the market consensus of 697.3 million dollars; organic growth was 7%, above the 4.5% consensus listed on the front page. Adjusted earnings per share were 1.37 dollars, 0.07 dollars above consensus.
Life sciences revenue was 379.6 million dollars, with organic growth of 9%, above the 4.7% consensus; both reagents and instruments exceeded expectations. Diagnostics organic growth was 5%, slightly above the 4.5% consensus, but revenue was 330 million dollars, 4.5% below consensus.
The pro forma revenue and growth figures above exclude the China immunodiagnostics business that is planned for sale.

Management says AI-related demand is spreading from high-content screening to a broader portfolio: growth in high-throughput screening instruments improved, and life sciences reagents posted high-single-digit growth. As AI-assisted drug discovery candidates advance toward clinical trial applications, the company expects in vivo imaging products to benefit as well.
The instrument order backlog continued to grow at the end of the third quarter, capacity for high-content screening has been expanded, and the company is building additional capacity. Bernstein notes, however, that incremental spending attributable to AI is difficult to distinguish confidently from an overall improvement in end markets; management also observed that spending by pharmaceutical and biotechnology customers is normalizing.
Signals software organic growth was close to 20% in the third quarter, contract renewals were strong, and annual recurring revenue grew more than 20%. The company expects new products launched in 2026 to make a more noticeable contribution in 2027.

The third-quarter pro forma adjusted operating margin was 29.4%, up 3.4 percentage points year over year and 0.5 percentage points above consensus. The life sciences margin rose to 31.5%, benefiting from volume-driven economies of scale and an improved product mix; management also attributed most of the margin improvement to structural efficiency measures taken over the past 18 months.
The company raised its 2026 organic revenue growth guidance from 4%–5% to approximately 5%, its adjusted operating margin guidance from 28.7% to 28.8%, and its adjusted earnings per share guidance from 5.30–5.40 dollars to 5.40–5.45 dollars; the guidance assumes current market trends continue in the fourth quarter.
The company expects fourth-quarter organic growth of approximately 5%. The slower growth compared with the third quarter is mainly associated with some screening reagent orders being brought forward into the third quarter and slower software growth; the timing of those orders contributed approximately 1 percentage point to third-quarter reagent growth.

Bernstein raised its 2027 adjusted earnings per share forecast from 5.90 dollars to 6.10 dollars and its price target from 120 dollars to 160 dollars; the 2027 price-to-earnings multiple used in its valuation rose from 21 times to 26 times.
The firm maintained its Market Perform rating: despite strong results and a strong 2027 outlook, the stock's relative price-to-earnings ratio is already significantly above its 2021 level, when the company's organic growth was 24%. The closing price listed in the report for 3 November 2026 was 163.48 dollars.