Michael Burry buys preferred shares of lab tech Bruker, citing resilient business

At the end of April, Michael Burry, the legendary investor and founder of Scion Asset Management, announced on his Cassandra Unchained Substack that he had bought preferred shares of laboratory equipment maker Bruker Corporation. The investment involved Bruker’s Series A mandatory convertible preferred stock (BRKRP), which carries a 6.375% coupon and mandatory conversion on September 1, 2028.

Burry wrote that Bruker is the smallest lab tech company that he follows. He argues that even though that its shares have sold off sharply under pressure from cuts to U.S. scientific research budgets, the firm is an internationally diversified player, and he said he has no doubts about the quality and resilience of the business.

Notably, Burry chose preferred stock rather than common shares. Bruker issued the securities in September in a $690 million offering, including the underwriters’ option exercise. Each preferred share has a liquidation preference of $250 and converts into 6.95-8.52 common shares depending on the volume-weighted average price over the 20 trading days preceding the conversion date.

Until conversion, holders receive a cumulative quarterly dividend of $3.98 per share. Since the securities were issued in September, the company has paid dividends without interruption. As a result, Burry receives a stable dividend yield above 6% annually while retaining exposure to potential upside in the business.

Bruker is a manufacturer of high-tech scientific equipment founded in Massachusetts in 1960. The company enjoys leading positions in nuclear magnetic resonance, atomic force microscopy, and X-ray analysis.

Its equipment is used across pharmaceuticals, biotechnology, semiconductors, academic research, and clinical diagnostics. The company operates four business segments, which provides diversification across its product portfolio. In addition, a significant share of revenue comes from Europe and Asia, reducing dependence on the budget policies of individual countries and mitigating regional cyclical risks.

Notably, Bruker remains a publicly traded company controlled by the founder’s family. Professor Günther Laukien founded the business, while today the CEO role is held by his son, Frank Laukien. Although family control is often criticized for excessive conservatism, in Bruker’s case the model has provided strategic consistency – both in M&A and in investments in R&D – for more than six decades.

Last year proved difficult for Bruker. Full-year revenue reached $3.44 billion, up 2%, but organic sales were down 4%. The main pressures came from reductions in U.S. academic funding, tariff restrictions, and FX fluctuations.

In the fourth quarter, revenue reached $977.2 million, essentially unchanged versus the same period of 2024, while organic revenue declined 5.1%. Adjusted earnings per share fell to $1.83 from $2.41 a year earlier, while adjusted operating margin narrowed to 15.7% from 18.1% a year earlier.

That gap between weak current performance and expectations for recovery may be the investment thesis that attracted Burry’s attention. For 2026, the management forecasts revenue in a range of $3.57-3.60 billion, implying growth of 4-5% year over year, alongside organic growth of 1-2% and adjusted earnings per share of $2.10-2.15. That would imply EPS growth of 15-17% year over year even as the strong dollar creates an FX headwind.

The key question is what factors will allow the company to achieve such a significant improvement in operating profitability – from a 10% adjusted operating margin in the first quarter to approximately 20% by the end of the fourth quarter. After speaking with Bruker CEO Frank Laukien at the Advances in Genome Biology and Technology General Meeting conference, analysts at Leerink Partners noted his confidence in achieving the stated targets. According to Leerink Partners analysts, the company expects an additional $20-25 million in cost savings beyond the previously announced $120 million, increasing the total annualized optimization program to $140-145 million. In addition, the first-quarter book-to-bill ratio points to backlog growth, while visibility into the second quarter supports expectations for a return to 3-4% organic growth.

At the AGBT conference, Bruker unveiled its PaintScape platform for single-cell genome visualization. With an expected price below $1 million, the technology could see broad adoption among spatial biology laboratories.

Burry’s decision is notable not so much because of the choice of issuer, but because of the structure of the position itself: mandatory convertible preferred stock provides coupon income, partially protects against further downside in the share price, and at the same time offers exposure to a potential recovery in the value of the business.

Bruker will report first-quarter results on Tuesday, which should show whether the operating-margin recovery projected by the management is beginning to materialize. Investors should pay attention to order trends, progress on the cost-cutting program, and the pace of commercialization of the company’s new platforms.

The company is primarily interesting for investors willing to tolerate medium-term volatility in exchange for upside potential, provided the macroeconomic environment does not deteriorate dramatically. As with most of Burry’s investments, the key question is not whether he will ultimately be right, but whether those who decide to follow him will have enough patience.

At the time of this writing, Bruker common shares were trading near $37 apiece, while the preferred stock traded around $290 per share. The company’s market capitalization stands at approximately $5.5 billion. Wall Street analysts cover Bruker’s common stock (BRKR), rather than the preferred shares purchased by Burry.

At the end of March, JPMorgan Chase reaffirmed its “overweight” rating – equivalent to a “buy” recommendation – on Bruker shares with a target price of $45 per share by the end of December. That implies upside of approximately 22% versus the Monday closing price. JPMorgan analyst Casey Woodring cited potential weakening demand in China, deterioration in macroeconomic conditions, the risk of market-share losses in the nuclear magnetic resonance segment, and difficulties integrating acquired assets as key risks.

Leerink Partners analyst Puneet Souda also assigned an “outperform” rating in a February note, highlighting strong order momentum, the management’s confidence in returning to organic growth in the second quarter, and additional cost-saving potential.

According to MarketWatch data, the stock has nine “buy” calls, six “hold” ratings, and just one “sell” recommendation. The average target price stands at $46.50 per share, implying upside of nearly 26.5%.

This text is for informational purposes only and does not constitute personalized investment advice.