Thermo Fisher Remains at Neutral - Analyst Blog
February 13 2013 - 12:44PM
Zacks
We recently reiterated our Neutral recommendation on
Thermo Fisher Scientific (TMO), a major scientific
instrument maker. While we hold a favorable view regarding the
company’s huge potential in the emerging markets, cost reduction
initiatives and value added acquisitions, concerns linger around
the overall soft industry trends with headwinds in the government
and academic markets. The stock currently carries a Zacks Rank #3
(Hold).
Why at Neutral?
Thermo Fisher posted encouraging fourth-quarter 2012 results
with adjusted earnings per share (EPS) of $1.36, surging past both
the Zacks Consensus Estimate of $1.28 and the adjusted EPS of $1.19
in the year-ago period. Revenues increased 6% year over year based
on 4% organic growth.
Given the huge potential in the emerging markets, the company
has been focusing on these regions, which paid off with their
robust performance during the quarter. We are also optimistic about
the company’s persistent acquisition spree including the recent One
Lambda, Dionex and Phadia acquisitions, which are expected to
strengthen the company’s product portfolio and provide better
access to regions with strong potential.
Moreover, Thermo Fisher continued to benefit from the successful
execution of its $100 million and $75 million of restructuring
actions initiated in 2011 and 2012, respectively.
However, over the past several years, Thermo Fisher has been
witnessing headwinds in the government and academic markets.
Moreover, many countries in Europe are also going through a tough
time that might impact their academic budgets. We remain cautious
since growth could moderate if the economic scenario
worsens.
Over the past 30 days, 3 of the 13 firms covering the stock made
positive estimate revisions for the current quarter, with 2 moved
in the opposite direction, implying that they still hold similar
views on the stock.
Other Stocks to Consider
While we prefer to remain on the sidelines on Thermo Fisher,
other medical device stocks worth a look are Cyberonics
Inc. (CYBX), Acadia Healthcare Company,
Inc. (ACHC) and ResMed Inc. (RMD). All
these stocks carry a Zacks Rank #1 (Strong Buy).
ACADIA HEALTHCR (ACHC): Free Stock Analysis Report
CYBERONICS INC (CYBX): Free Stock Analysis Report
RESMED INC (RMD): Free Stock Analysis Report
THERMO FISHER (TMO): Free Stock Analysis Report
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