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Thermo Fisher (TMO) Rides on APAC Strength Despite Cost Woes

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On Nov 19, we issued an updated research report on Thermo Fisher Scientific, Inc.TMO . Banking on several takeovers including Patheon and FEI acquisitions, this leading scientific instrument maker is rapidly ramping up its inorganic growth profile. The company's strong focus on the emerging markets is also encouraging. The stock has a Zacks Rank #3 (Hold).

Thermo Fisher ended the third quarter on a promising note, surpassing on both the top and the bottom line. The company saw strength in all the end markets, categorized either by customer type or geographies. The company particularly registered a solid international performance with strong growth in Asia-Pacific including China.

Also, a series of product launches with progress in precision medicine initiatives aided the overall performance. We are currently looking forward to the company's recent purchase of Advanced Bioprocessing business from Becton, Dickinson and Company or BD. The acquisition will add complementary cell culture products to Thermo Fisher's bioproduction offerings.

Also, the company's plan to buy Gatan to boost its electron microscopy suite buoys optimism on the stock. Over the past year, Thermo Fisher has outperformed its industry . The stock has rallied 21.1% compared with the industry's 7.5% rise.The promising 2018 guidance also uplifts the mood to indicate the stock's continuous bull run throughout the remainder of the year.

On the flip side, the company's business segments have been impacted by an unfavorable business mix over the last few quarters. Also, competitive headwinds and rising operating costs persistently pose a threat. This apart, Thermo Fisher derives majority of its revenues from the international market, which exposes it to currency volatility.

Zacks Ranks & Key Picks

Thermo Fisher currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader medical space are Masimo Corporation MASI , Stryker Corporation SYK and Veeva Systems VEEV .

Masimo's long-term earnings growth rate is projected at 14.6%. The stock carries a Zacks Rank #2 (Buy).

Stryker has a long-term expected earnings growth rate of 10% and a Zacks Rank of 2. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Veeva Systems' long-term earnings growth rate is estimated at 19.3%. The stock is a Zacks #2 Ranked player.

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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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