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Thermo Fisher Hits New 52-Week High: What's Driving the Stock?

Zacks Equity Research

Shares of Thermo Fisher Scientific Inc. TMO reached a new 52-week high of $331.98 on Jan 10, closing the session marginally lower at $328.73. The stock has rallied 10.8% since its third-quarter earnings announcement on Oct 23.

The company’s strong third-quarter results, backed by a series of product launches, strong end-market growth and impressive international performance prompted the uptrend.

Let us delve deeper.



 

Q3 Performance

Thermo Fisher ended the third quarter of 2019 on a strong note, with better-than-expected results. It witnessed year-over-year revenue improvements in three of its four business segments as well as globally. The company is upbeat about the solid year-over-year improvement in the Life Sciences Solutions Segment, led by strong performances of pharma and biotech.

It delivered solid international performance, with high growth in Europe and the Asia Pacific, including China.

Over and above, the company’s raised guidance for 2019 indicates that it will be able to maintain its ongoing bullish momentum in the fourth quarter as well.

Other Key Drivers

Acquisitions: Investors are optimistic about Thermo Fisher’s slew of acquisitions, the latest one being that of an active pharmaceutical ingredient manufacturing facility of GlaxoSmithKline in Cork, Ireland. The site produces complex Active Pharmaceutical Ingredients used to treat diseases, including childhood cancers, depression and Parkinson’s.

This apart, acquisitions of HighChem (a small business that expands Thermo Fisher’s mass spectrometry software offerings) and Brammer Bio (provides treatment options in gene and cell therapies to patients with rare diseases) were other milestones for the company.

Product Launches: Investors are also upbeat about Thermo Fisher’s slew of product launches, including TSQ Altis, Quantis MD mass spectrometers and Vanquish MD HPLC for clinical diagnostic laboratories. The company is optimistic about its broadening global market reach, with new Biosciences Customer Exploration Center in Shanghai and the expansion of a clinical trial logistics facility in Suzhou.

Further, Thermo Fisher launched a scalable bioreactor workflow called Thermo Scientific TruBio Discovery Automation System. The system establishes connections between bioreactors, controllers and software for easy data transfer.

Emerging Markets: The company’s increased focus on the emerging markets buoys optimism. It witnessed strong international operations and consistent growth in the Asia Pacific and emerging markets. It plans to continue to strengthen its foothold in emerging markets, such as China and India, and to translate this success to other high-growth priorities in regions such as South Korea, Russia and Brazil. In the third quarter of 2019, the strongest growth contributor was China.

Zacks Rank & Key Picks

Currently, Thermo Fisher carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader medical space are Haemonetics Corporation HAE, Hill-Rom Holdings, Inc HRC and Vapotherm, Inc VAPO.

Haemonetics, currently flaunting a Zacks Rank #1 (Strong Buy), has a projected long-term earnings growth rate of 13.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Hill-Rom’s long-term earnings growth rate is estimated at 11.7%. The company currently carries a Zacks Rank #2.

Vapotherm’s long-term earnings growth rate is estimated at 49.5%. It currently carries a Zacks Rank #2.

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