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Thermo Fisher Poised on Innovation, Global Growth Amid Woes

Zacks Equity Research

On Mar 16, 2017, we issued an updated research report on Thermo Fisher Scientific Inc. TMO, a scientific instrument maker and world leader in serving science. Over the past three months, Thermo Fisher has traded above the Zacks categorized Medical - Instruments industry.

The market was concerned about Thermo Fishers’ sluggish top-line performance in the last reported fourth-quarter 2016, which was affected by four less selling days in the quarter. But the company’s recent product launches and strong emerging market growth buoy optimism.

Additionally, we are encouraged by Thermo Fishers’ strong bottom-line performance and a solid guidance that raised the stock price. Also, we believe Thermo Fishers’ colossal $4.2 billion acquisition of FEI Company is going to significantly facilitate the company’s performance in life-science research.

Moreover, the integration and expected synergy of Affimetrix, another mega acquisition of Thermo Fisher, are anticipated to boost its offering in the fast-growing flow cytometry market. Per the last trading price, the stock increased 11.87% over the past three months, ahead of the broader market’s gain of 10.99%.

Thermo Fisher Scientific Inc Price

Thermo Fisher Scientific Inc Price | Thermo Fisher Scientific Inc Quote

This apart, Thermo Fisher boasts strong international operations and has witnessed consistent growth in the Asia-Pacific and emerging markets. The company plans to continue strengthening its foothold in emerging markets, such as China and India, and also translate this success to other high-priority opportunities in regions such as South Korea, Russia and Brazil.

On the flip side, flat organic top-line growth during the last-reported quarter was  disappointing. Even for the year 2017, the company forecasted organic growth of just 4%. This prediction was due to an expectation that it might register a growth below 4% in the first quarter, on the basis of certain spending restriction, thereby indicating gloomy scenario ahead.

Also currency headwinds continue to act as major dampener. In 2016, the company’s earnings were affected to the tune of 2.5% on headwind from foreign exchange. In addition, the company currently estimates an unfavorable foreign exchange to have a negative impact on its top-line performance even in 2017. Further, it has also forecasted foreign exchange to affect revenues by $300 million in 2017, which in turn might impact of over 1.5%.

Zacks Rank & Key Picks

Thermo Fisher currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the medical product sector are Inogen, Inc. INGN, Bovie Medical Corp. BVX and ResMed, Inc. RMD. While Inogen sports a Zacks Rank #1 (Strong Buy), the other two companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Inogen gained 87.3% in the last year in comparison with the S&P 500’s return of 16.8%. The company has a stellar four-quarter average earnings surprise of over 49.08%.

Bovie Medical surged 44.7% in the last one year in comparison with the S&P 500. It has a four-quarter average earnings surprise of 28.7%.

ResMed gained over 27.7% in the past one year, better than the S&P 500 mark. It also has a trailing average earnings surprise of 0.31%.

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Thermo Fisher Scientific Inc (TMO): Free Stock Analysis Report
Inogen, Inc (INGN): Free Stock Analysis Report
ResMed Inc. (RMD): Free Stock Analysis Report
Bovie Medical Corporation (BVX): Free Stock Analysis Report
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