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Revvity's (RVTY) stock is plunging lower following the release of its 2Q25 earnings report, with the weakness directly tied to the company's downward revision of its FY25 EPS guidance to $4.85-$4.95, down from the previous $4.90-$5.00 range. While the company did slightly nudge its FY25 revenue guidance higher to $2.84-$2.88 bln, reflecting modest optimism, this adjustment is providing little consolation to investors who are more focused on the profitability outlook.

• Adjusted operating profit margin contracted to 26.6% in Q2 from 28.8% in the year-earlier period, a decline that signals mounting pressure on profitability. Key factors driving this margin compression include unfavorable product mix, ongoing investments, and heightened cost pressures, particularly from tariffs and supply chain dynamics, which have impacted both the Life Sciences and Diagnostics segments. These margin pressures likely played a pivotal role in RVTY's decision to lower its FY25 EPS guidance, as the company grapples with balancing growth initiatives against rising operational costs.
• In the Life Sciences segment, revenue saw a solid 4% increase on an organic basis, driven by robust demand for reagents and double-digit growth in the Signals Software business, fueled by new orders and strong SaaS performance. While pharmaceutical and biotech sales contributed modestly, the segment faced a low-single-digit decline in instrumentation revenue due to soft academic and government demand, though this was offset by the software strength.
• The Diagnostics segment recorded a 2% organic revenue increase, propelled by low-single-digit growth in immunodiagnostics globally, bolstered by strength in the Americas and recent menu expansions. The reproductive health business also contributed with high-single-digit growth in newborn screening, while a key milestone—the FDA approval of an automated platform for the T-SPOT latent tuberculosis test—positions the segment for further upside in a significant market. However, double-digit declines in China due to policy changes tempered overall gains, reflecting geographic disparities.
• RVTY's transformation plan, a strategic overhaul aimed at enhancing operational efficiency, driving innovation, and fostering partnerships, has been a critical enabler of its ability to exceed revenue expectations. Key aspects include a focus on cost management, the launch of advanced platforms like the IDS i20 analytical system, and investments in R&D to bolster its product pipeline, all of which underscore the company's commitment to long-term value creation.

RVTY's weakness stems primarily from persistent margin pressures and the downwardly revised FY25 EPS guidance, which have overshadowed the revenue beat and slight guidance lift. The company's transformation plan offers some hope of improved results down the road, but the combination of modest top-line growth and eroding margins isn't sitting well with investors today.