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Here's Why You Should Add Thermo Fisher to Your Portfolio

Zacks Equity Research

Thermo Fisher Scientific Inc. TMO has been gaining investors’ confidence on consistently positive results. Over the past year, the company’s shares have outperformed its industry. The stock has gained 13% against 8.9% decline of the industry. Also, the company has outperformed the S&P 500’s 2.3% decline during this period.

The renowned medical and laboratory equipment provider has a market cap of $111.95 billion. The company’s five-year projected growth rate looks impressive at 12.5%. It is expected to scale new highs in the near term. The company has average positive earnings surprise of 2.1% for the trailing four quarters.

With solid prospects, the Zacks Rank #2 (Buy) company is a worthy investment choice right now.

 


What Makes the Stock an Attractive Pick?

Product Launches: The company’s series of product launches buoy optimism. Thermo Fisher has recently collaborated with GlaxoSmithKline GSK to expand its active pharmaceutical ingredient (API) manufacturing abilities. It also launched the next-generation Thermo Scientific DXR3 Family of Raman Spectrometers and Microscopes, which is expected to meet demands of busy laboratories. The company has also designed a new multi-frequency metal detector for food manufacturers and quality managers to optimize productivity. It also launched Phenom ParticleX to provide faster quality-control analyses to automotive suppliers and additive manufacturing companies.

Acquisitions and Partnerships to Add Value: Thermo Fisher recently allied with Eli Lilly and Company LLY to develop a companion diagnostic, which will use the FDA-approved next-generation sequencing-based, Oncomine Dx Target Test. This will be used to identify certain non-small cell lung cancer (NSCLC) and thyroid cancer patients, who may be treated with Lilly's investigational therapy, LOXO-292.

Further, it signed a deal with Cedars-Sinai (a nonprofit academic healthcare organization) to develop precision medicine through the development of a robust, reliable and sensitive liquid chromatography mass spectrometry (“LC-MS”)-based workflows for medical research applications.

Strong End-Market Growth: Thermo Fisher is experiencing strong growth in the pharma and biotech sector. Although in the last reported quarter, growth in industrial and applied segments was in low-single digits, the company performed well on strong demand for its chemical analysis, chromatography and mass spectrometry products. It also maintained growth momentum in clinical diagnostics and immunodiagnostic businesses, and witnessed strong demand in its health-care market channel.

Raised Guidance Buoys Optimism: Thermo Fisher recently raised its 2019 adjusted earnings per share guidance to $12.16-$12.26 from $12.08-$12.22 mentioned earlier. The Zacks Consensus Estimate for earnings of $12.25 remains within the company’s projected range. This indicates that it will likely be able to maintain its ongoing bullish momentum throughout the rest of the year.

Which Way Are Estimates Heading?

The estimate revision trend for the current year is impressive. Over the past 90 days, the Zacks Consensus Estimate for the company’s earnings has inched up 0.4% to $12.25.

The Zacks Consensus Estimate for 2019 revenues is pegged at $25.43 billion, suggesting a 4.4% increase from the year-ago reported number.

Another Key Pick

Another top-ranked stock in the broader medical space is GW Pharmaceuticals plc GWPH. It estimates third-quarter earnings growth rate at 70.2%. The company currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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Eli Lilly and Company (LLY) : Free Stock Analysis Report
 
GlaxoSmithKline plc (GSK) : Free Stock Analysis Report
 
Thermo Fisher Scientific Inc. (TMO) : Free Stock Analysis Report
 
GW Pharmaceuticals PLC (GWPH) : Free Stock Analysis Report
 
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Zacks Investment Research