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Thermo Fisher (TMO) Rides on New Buyouts and APAC Strength

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On Dec 12, we issued an updated research report on Thermo Fisher Scientific, Inc. (TMO - Free Report) . Banking on several takeovers including Patheon and FEI acquisitions, the company is rapidly ramping up its inorganic growth profile. Its strong focus on the emerging markets is also encouraging. The stock has a Zacks Rank #3 (Hold).

A leading scientific instrument maker, Thermo Fisher ended the third quarter of 2018 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. It registered a solid international performance, particularly with strong growth in Asia-Pacific including China.  

Also, a series of product launches with progress in precision medicine initiatives aided the stock’s 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 investors’ optimism.

 

Over the past year, Thermo Fisher has outperformed its industry. The stock has rallied 28.2% compared with the industry’s 14% rise. The promising 2018 guidance also uplifts the mood to indicate the stock’s consistent bull run in the remainder of the year.

On the flip side, an unfavorable business mix has affected the company’s business segments over the last few quarters. Also, competitive headwinds and rising operating costs are an overhang on the stock. This apart, Thermo Fisher derives a majority of its revenues from the international market, which exposes it to currency volatility.

Key Picks

Some better-ranked stocks in the broader medical space are Veeva Systems (VEEV - Free Report) , Integer Holdings Corp. (ITGR - Free Report) and Surmodics, Inc. (SRDX - Free Report) .

Veeva Systems’ long-term earnings growth rate is estimated at 19.2%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Integer Holdings has an earnings growth rate of 30.3% for 2018 and a Zacks Rank #2 (Buy).

Surmodics’ long-term earnings growth rate is projected at 10%. The stock carries a Zacks Rank of 2.

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