On Nov 23, 2015, we issued an updated research report on Thermo Fisher Scientific Inc. TMO – scientific instrument maker and a world leader in serving science.
Thermo Fisher reported a better-than-expected third-quarter 2015 with adjusted EPS and revenues exceeding the respective Zacks Consensus Estimate. However, the top line suffered on a year-over-year basis due to the impact of an unfavorable foreign exchange rate. Despite that, Thermo Fisher increased its 2015 revenue and earnings guidance reflecting strong operational performance as well as a robust scope for improvement despite the current challenging scenario.
According to the company, Thermo Fisher is perfectly on track to deliver revenue and cost synergy targets. In the third quarter, the company realized $32 million of incremental cost synergies, in line with its full year target of $130 million. Revenue synergies during the quarter were $25 million which puts Thermo Fisher in a comfortable position to slightly exceed its full year targeted synergy of $60 million. Accordingly, the company is also on track to deliver $150 million in revenue synergies in 2016.
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 also resulting in tax synergies.
We are also encouraged to note that, even amid a muted government funding environment in China, the company managed to deliver double-digit growth therein in the third quarter of 2015, which contributed to healthy growth in overall APAC. The strength came on solid demand for laboratory equipment, consumables and bioscience reagents.
However, economic uncertainties and currency headwinds continue to act as major dampeners. The stock currently holds a Zacks Rank #2 (Buy).
Key Picks in the Sector
Other medical instrument stocks that warrant a look include Masimo Corporation MASI, Natus Medical Inc. BABY and Olympus Corporation OCPNY. All three stocks carry a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report THERMO FISHER (TMO): Free Stock Analysis Report MASIMO CORP (MASI): Free Stock Analysis Report NATUS MEDICAL (BABY): Free Stock Analysis Report OLYMPUS CORP (OCPNY): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research