On Aug 17, 2014, we issued an updated research report on
Thermo Fisher Scientific Inc.
) - scientific instrument maker and a world leader in serving
science. Despite challenging economic conditions, a competitive
environment and pressure on core segments, Thermo Fisher managed to
post healthy second-quarter 2014 results, handily beating both the
revenue and earnings estimates. Notably, this was the first
full quarter of operation post completion of the Life Technologies
The adjusted earnings per share (EPS) of $1.72 and revenues of
$4.32 billion steered ahead of the Zacks Consensus Estimate of
$1.62 and $4.24 billion respectively. The results also sailed past
the year-ago numbers.
The reported quarter takes into account Life Technologies'
products reported under the Life Sciences Solutions segment. The
company is perfectly on track with the integration and is making
good progress on the execution of the plan.
In fact, we are encouraged to know that Thermo Fisher is ahead
of its original synergy target for the year. The company currently
expects to achieve $100 million in synergies in 2014, up from the
$85 million originally anticipated. The company is also confident
with its overall three-year synergy target which had been increased
from $300 million to $350 million at the analyst meeting held in
May this year.
Given Life Technologies' expansive line of consumables for
genomic, and molecular and cell biology, the buyout is expected to
complement Thermo Fisher's market-leading portfolio of analytical
technologies and specialty diagnostics.
According to the company, the takeover has given birth to an
unrivaled market leader serving research, Specialty Diagnostics and
applied markets. As per management at Thermo Fisher, the
acquisition supports its three-pronged growth strategy of
technological innovation, a unique customer value proposition and
expansion in emerging markets.
Additionally, Thermo Fisher expects the sellout of Cole-Parmer
channel business, which is likely to be closed in the third
quarter, to have immaterial impact on the company's 2014 EPS. This
sellout decision is consistent with Thermo Fisher's strategy to
focus on its core segment.
Additionally, substantial expansion in the Asia-Pacific market,
mainly China, is on the cards for the company. Given the huge
potential in the region and high growth rate in China, Thermo
Fisher is likely to exceed its goal of garnering 25% of revenues
from the high-growth Asia-Pacific region and emerging markets by
However, in a challenging market environment, mere 3% organic
growth remains a matter of concern. Moreover, economic
uncertainties and currency headwinds continue to act as major
dampeners. The stock currently holds a Zacks Rank #2 (Buy).
Other Stocks to Consider
Some other well-ranked medical instruments stocks that warrant a
look are Edwards Lifesciences Corp. (
), Hologic Inc. (
) and Hansen Medical, Inc. (
). All the three stocks carry a similar Zacks Rank #2.
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THERMO FISHER (TMO): Free Stock Analysis Report
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