Thermo Fisher Scientific, Inc. (TMO): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report
Summary:
Having completed a third full quarter post the Life Technologies acquisition, Thermo Fisher announced an outstanding fourth-quarter 2014 with adjusted EPS of $1.99, ahead of the Zacks Consensus Estimate and the year-ago adjusted number by 39.2%. Revenues of $4.49 billion sailed past the year-ago number by 29.8%, beating the Zacks Consensus Estimate of $4.39 billion. The company is on track with the integration process and has achieved $115 million in synergies in 2014, significantly up from the $85 million originally anticipated. However, in a challenging market environment, still low organic growth remains a concern. Moreover, economic uncertainties and currency headwinds continue to act as dampeners. We are thus Neutral' on the stock.
Overview:
Headquartered in Waltham, MA, Thermo Fisher Scientific Inc. (TMO) is a scientific instrument maker and a world leader in serving science. Thermo Fisher was incorporated in 1956 as Thermo Electron Corporation. In Nov 2006, Thermo Fisher Scientific, Inc. was formed through the merger of Thermo Electron Corporation with Fisher Scientific International Inc.
On Feb 3, 2014, Thermo Fisher announced the much-anticipated completion of the acquisition of Life Technologies Corporation. The acquisition was closed on payment of approximately $13.6 billion in cash, along with the assumption of $1.5 billion in net debt.
Following the acquisition, Thermo Fisher made changes in its reporting segments Per the changes, effective from Jan 1, 2014, the new segments are:
Life Sciences Solutions Segment: This is the new segment added by the company post the acquisition of Life Technologies. It incorporates majority of the former Life Technologies and Thermo Fisher's Biosciences businesses. Although the segment has been only recently added, the company has reported the results on a pro forma basis.
Analytical Instruments: Formerly known as Analytical Technology, this segment has been renamed in order to reflect the transfer of the bioprocess production business to the newly formed Life Sciences Solutions Segment post the takeover of Life Technologies. This segment caters majorly to industrial and applied markets.
Specialty Diagnostics (SD): This segment, formed after the acquisition of Phadia, serves customers in healthcare and clinical laboratories with a portfolio of diagnostic test kits, reagents and instruments used to increase the speed and accuracy of diagnoses to improve patient care. The segment also includes the company's healthcare market customer channel consisting of catalog, e-commerce and direct sales. This segment has six primary businesses Immuno Diagnostics, Clinical Diagnostics, Transplant Diagnostics, Microbiology, Anatomical Pathology and Healthcare Market Channel. Post-acquisition, management has incorporated the two small Specialty Diagnostics businesses within Life Technologies into the Specialty Diagnostics segment of Thermo Fisher.
Laboratory Products and Services (LPS): This segment serves laboratory customers with equipment and consumables that improve productivity and a range of BioPharma outsourcing services such as clinical trials management and logistics. This segment also includes the company's research and safety market customer channels consisting of catalog, e-commerce and direct sales. Post-acquisition, Thermo Fisher's Global Chemicals business has moved from the Biosciences business to the Laboratory Products and Services Segment.
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