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Thermo Fisher Scientific, Inc. (TMO): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report
Thermo Fisher posted a better-than-expected fourth quarter 2013 results with adjusted EPS of $1.43 and revenues of $3.47 billion, both ahead of the Zacks Consensus Estimate of $1.38 and $3.30 billion. The results also sailed past the year-ago numbers. The company is carrying out all basic procedures to take over Life Technologies which is expected to complete in early 2014. The proposed buyout of Life Technologies is expected to complement Thermo Fisher's portfolio of analytical technologies and specialty diagnostics. Besides, in a challenging market environment, a 6% organic growth is encouraging. However, economic uncertainties and currency headwind continue to act as major dampeners. We are Neutral' on the stock.
Headquartered in Waltham, Massachusetts, Thermo Fisher Scientific Inc. (TMO) is a scientific instrument maker and a world leader in serving science. Thermo Fisher was incorporated in 1956 as Thermo Electron Corporation. In Nov 2006, Thermo Fisher Scientific, Inc. was formed through the merger of Thermo Electron Corporation with Fisher Scientific International Inc.
The company operates through the following three business segments:
Analytical Technologies (AT): This segment caters to research scientists and customers in manufacturing with offerings consisting of instruments, bioscience reagents, consumables and software, primarily for life science research and for use in scientific, environmental and process applications.
Specialty Diagnostics: This segment, formed after the acquisition of Phadia, serves customers in healthcare and clinical laboratories with a portfolio of diagnostic test kits, reagents and instruments, used to increase the speed and accuracy of diagnoses to improve patient care. The segment also includes the company's healthcare market customer channel consisting of catalog, e-commerce and direct sales.
Laboratory Products and Services (LPS): This segment serves laboratory customers with equipment and consumables that improve productivity and a range of BioPharma outsourcing services such as clinical trials management and logistics. This segment also includes the company's research and safety market customer channels consisting of catalog, e-commerce and direct sales.
End market review
Thermo Fisher derives its revenues from four end-markets Industrial/Applied, Pharma and Biotech, Healthcare and Government/Academic. As envisioned by the company, the Academic/Government market declined in low-single digits with moderate growth in laboratory consumables, offset by weaker funding environment and lower spending on capital equipments. The situation in the healthcare and diagnostics markets was almost similar over the past few quarters, which grew in the mid-single digits, with robust growth of specialty diagnostic products driven by strength in the biomarkers business and strong flu season. The company expects strong demand for biomarker test and clinical diagnostic products in the coming quarters. Thermo Fisher witnessed low-single digit growth in the industrial and applied markets as some of the company's industrial customers are taking longer time to make purchase decision. In the pharmaceutical and biotech space, high single digit growth was experienced in the bioprocess production business that led to market share gain.
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