Thermo Fisher Scientific
) reported adjusted earnings per share ("EPS") of $1.36 in the
fourth quarter of fiscal 2012, which surpassed the Zacks
Consensus Estimate of $1.28 and the adjusted EPS of $1.19 in the
year-ago period. Fiscal 2012 EPS increased 19% compared with the
year-ago period to reach $4.94 and sailed past the Zacks
Consensus Estimate of $4.85 as well.
Revenues increased 6% year over year to reach $3.26 billion
during the quarter, higher than the Zacks Consensus Estimate of
$3.12 billion, based on 4% organic growth. For the entire year,
revenues increased 8% to $12.51 billion, ahead of the Zacks
Consensus Estimate of $12.39 billion. Fiscal revenue growth on a
pro forma basis (considering the Dionex and Phadia acquisitions
were owned for the entire fiscal 2011) was 4%. Moreover, there
was a 1% tailwind from acquisitions other than Phadia, negated by
a 2% impact from currency translation.
Thermo Fisher reports revenues under three segments -
Analytical Technologies, Specialty Diagnostics, and Laboratory
Products and Services. These three segments recorded revenues of
$1.11 billion (2% annualized growth), $792 million (up 12%) and
$1.50 billion (up 4%), during the fourth quarter,
Gross margin expanded 49 basis points (bps) to 44.3% during
the quarter. In addition, Thermo Fisher witnessed a 10.8%
increase in adjusted operating income for the fourth quarter of
2012 to $625.1 million leading to an adjusted operating margin of
19.2%, up 92 bps year over year. Adjusted figures exclude
amortization of acquisition-related intangible assets and
restructuring costs and related tax benefits.
The company exited the fiscal with cash and cash equivalents
of $851.3 million compared with $1,016.3 million at the end of
Dec 2011. A strong cash balance helps the company pursue suitable
acquisitions or reward its shareholders through share buybacks.
During the reported quarter, the company deployed $350 million to
repurchase 5.7 million shares.
Thermo Fisher provided its fiscal 2013 guidance. The company
expects adjusted EPS in the band of $5.32−$5.46 for 2013,
(resulting in annualized growth rate of 8%−11%) on revenues of
$12.80−$13.00 billion (2%−4%). The Zacks Consensus Estimates for
EPS and revenue of $5.40 and $12.94 billion, respectively, fall
within the guided range.
We are encouraged by Thermo Fisher's performance in the fourth
quarter with both revenues and EPS sailing past the respective
Zacks Consensus Estimates. We are optimistic about the company's
acquisition spree, which includes the recent ones like One
Lambda, Dionex and Phadia. These acquisitions are expected to
strengthen the company's product portfolio and provide better
access to regions with strong potential. We believe that the
acquisition of One Lambda, with strong operating margin, should
also benefit the company and be accretive to earnings in
Over the recent past, a rumor of another acquisition by Thermo
Fisher has been at play. According to a
this time it is a big name, the company's arch rival
), which currently has a market cap of $1.11 billion.
Although we remain skeptical about the credibility of the
acquisition news, we believe, the company's strong cash position
enables it to make suitable acquisitions or repurchase shares,
thereby improving the bottom line further.
Thermo Fisher retains a Zacks Rank #2 (Buy). Medical devices
stocks such as
), which carry a Zacks Rank #1 (Strong Buy) are also worth
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