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Thermo Fisher Gets a Boost from Buyouts and Global Expansion

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On Oct 9, we issued an updated research report on Thermo Fisher Scientific, Inc. (TMO - Free Report) . Banking on several takeovers including the recent Brammer Bio, 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 #2 (Buy).

Over the past year, Thermo Fisher has successfully outperformed its industry. The stock has rallied 18.2% compared with the industry’s 0.8% rise.

Thermo Fisher ended second-quarter 2019 on a promising note with adjusted earnings surpassing the consensus mark while revenues meeting the same. The company saw strength in all end markets categorized either by customer type or geography.

The company particularly registered a solid international performance with strong growth in Europe and Asia-Pacific including China. Also, a series of product launches with progress in precision medicine initiatives aided its performance.

During the quarter, the company launched a range of products within mass spectrometry including two new-generation Orbitrap systems, namely the Exploris 480 and Eclipse Tribrid. Within genetic analysis, the company unveiled the Applied Biosystems QuantStudio 6 and 7 Pro Real-Time PCR systems to automate qPCR workflows.

We are also looking forward to the company’s recently-completed acquisition of Brammer Bio, a leader in viral vector manufacturing. This move was in line with the company’s strategy to significantly expand capabilities in the fast-growing gene and cell therapy market.

Even after considering the impact of its divestiture of its Anatomical Pathology business (closed in the second quarter), Thermo Fisher has raised its 2019 revenue and earnings guidance. This is indicative of the ongoing bullish momentum to continue through the balance of 2019.

On the flip side, Thermo Fisher’s operating segments are being affected by an unfavorable business mix. Competitive headwinds and escalating costs also pose a threat to the stock.

Other Key Picks

A few other top-ranked stocks in the broader medical space are Stryker (SYK - Free Report) , Hill-Rom Holdings and Syneos Health , all carrying a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stryker’s long-term earnings growth rate is expected to be 10.04%.

Hill-Rom Holdings’ long-term earnings growth rate is projected at 10.01%.

Syneos Health’s long-term earnings growth rate is estimated to be 10.5%.

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