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Thermo Fisher on Track with Life Technologies Synergy

On Sep 24, 2015, we issued an updated research report on Thermo Fisher Scientific Inc.TMO - scientific instrument maker and a world leader in serving science.

Currently the company is on track to deliver revenue and cost synergy targets from the Life Technologies integration. At the end of 2015, the company expects to deliver $130 million worth of cost synergy benefits, a $5 million increase from the earlier target, primarily due to accelerating realization of headcount and sourcing synergies. The company is also confident of its overall three-year synergy target which was raised from $300 million to $350 million.

Thermo Fisher expects revenue synergies to accelerate through 2015 and hence, is hopeful about achieving the full-year 2015 guidance of $60 million in revenue synergies and $20 million in adjusted operating income pull-through. Year to date, revenue synergies total $25 million, lower than the midpoint of the target. However, the company expects a ramp-up in this regard over the coming quarters.

Thermo Fisher has carried out multiple acquisitions that have added complementary technologies, expanded its presence in high-growth markets, and generated cost and revenue synergies, thereby creating shareholder value. Apart from boosting revenue accretion, these deals have historically benefited the company's operating margin while resulting in tax synergies too.

The company is optimistic about its recent developments which consist of a set of product launches including Orbitrap Fusion LumosTribrid mass spectrometer and Q Exactive GC-MS/MS; the impending $400 million acquisition of Alfa Aesar; and increased presence in emerging markets.

Notably, Thermo Fisher reported better-than-expected second-quarter 2015 results, with its adjusted EPS and revenues exceeding the respective Zacks Consensus Estimate. However, the top line was affected year over year by the impact of unfavorable foreign exchange rates and divestitures. Also, economic uncertainties and currency headwinds continue to act as major dampeners. The stock currently holds a Zacks Rank #2 (Buy).

Key Picks from the Sector

Other medical instrument stocks that warrant a look include Cyberonics Inc. CYBX , EDAP TMS SA EDAP and Masimo Corporation MASI . All the three stocks sport a Zacks Rank #1 (Strong Buy).

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THERMO FISHER (TMO): Free Stock Analysis Report

MASIMO CORP (MASI): Free Stock Analysis Report

CYBERONICS INC (CYBX): Free Stock Analysis Report

EDAP TMS SA-ADR (EDAP): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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