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Thermo Fisher shares gain after 4Q profit rises

NEW YORK (AP) -- Shares of Thermo Fisher Scientific Inc. rose Friday after the maker of scientific instruments posted better-than-expected fourth-quarter earnings and was upgraded by JPMorgan Chase & Co.

THE SPARK: JPMorgan upgraded the shares of the maker of scientific instruments to "Overweight" from "Neutral." JPMorgan said it was impressed that the company expects to grow and improve profit margins even with the possibility of federal spending cuts and weak industrial markets.

Thermo Fisher reported Thursday that fourth-quarter earnings rose 30 percent on higher sales of diagnostic instruments. Net income was $376.4 million, or $1.04 per share, and excluding one-time charges, the company would have earned $1.36 per share. Analysts had expected $1.28 per share.

The company expects 2013 earnings of $5.32 to $5.46 per share, while analysts were looking for $5.43 per share.

THE ANALYSIS: JPMorgan analyst Tycho Peterson said the company's targets were very achievable even if a political fight over federal spending causes automatic spending cuts or "sequestration" to kick in. Thermo Fisher's 2013 forecast assumed a 5 percent cut in spending for a key customer, the U.S. National Institutes of Health.

THE BIG PICTURE: Executive of the Waltham, Mass., company said sales to academic and government customers have dropped while sales to pharmaceutical and biotech companies have increased.

SHARE ACTION: In afternoon trading, the shares were up $2.72, or 3.8 percent, to $74.86. Earlier in the session, they hit a 52-week high of $75.79. JPMorgan raised its price target on the stock by $10 to $80, implying shares are expected to rally about 11 percent over 12 months.