Thermo Fisher (TMO) Scales a 52-Week High: What's Driving It?
On Oct 3, shares of Thermo Fisher Scientific Inc. TMO reached a 52-week high of $249.95, closing the session marginally lower at $247.35.
Over the past year, shares of Thermo Fisher have rallied 27.9% in comparison with the industry’s gain of 27.3%. The current level is also higher than the S&P 500 index’s rise of 15.9%.
This leading scientific instrument maker is expected to scale new highs in the near term. The company has an average positive earnings surprise of 4% for the trailing four quarters.
The estimate revision trend for the current year is impressive as well. Over the past 90 days, the Zacks Consensus Estimate for earnings per share inched up 0.64% to $10.98.
The stock carries a Zacks Rank #2 (Buy).
Factors Driving Thermo Fisher
Three-Pronged Strategy Bodes Well
Thermo Fisher has been progressing well with respect to its three-pronged strategy. The commitment to develop high-impact, innovative products forms the first leg of the strategy. In this regard, the company launched Thermo Scientific Q Exactive UHMR Hybrid Quadruple and the Thermo Scientific ID-X Tribrid systems at American Society for Mass Spectrometry (ASMS) in June to boost its Orbitrap platform.
Thermo Fisher has been progressing with reference to the second part of strategy. The company has been actively involved in strengthening its position in emerging and high-growth markets.
The company’s third leg of the growth strategy requires it to provide unique customer value proposition. In this regard, Thermo Fisher implemented its PPI Business System to drive operational excellence.
Strength in End Markets
In second-quarter 2018, Thermo Fisher witnessed strength in all end markets, categorized either by customer type or geography. In pharma and biotech, the company witnessed mid-teens growth.
In diagnostics and healthcare, Thermo Fisher delivered mid-single digit growth on broad-based strength across its businesses serving this end market. Sustained strong demand in the Analytical Instruments business led to mid single-digit growth in the industrial and applied market. Finally, in the academic and government market, the company delivered high single-digit growth.
Globally, Thermo Fisher witnessed strength across all regions along with continued progress in China, where the company saw a growth rate of more than 20%.
Focus on Emerging Markets
Thermo Fisher boasts strong international operations and has witnessed consistent growth in the Asia-Pacific and emerging markets. The company plans to continue to strengthen its foothold in emerging markets, such as China and India, and to translate this success to other high-priority opportunities in regions such as South Korea, Russia and Brazil. In second-quarter 2018, the standout contributor was China. Overall, Thermo Fisher witnessed low-teens growth in the Asia-Pacific region.
Key Picks
Other top-ranked stocks in the broader medical space are Intuitive Surgical ISRG, Amedisys, Inc. AMED and Masimo Corporation MASI.
Intuitive Surgical’s long-term expected earnings growth rate is 14.7%. The stock currently carries a Zacks Rank of 2.
Amedisys’ long-term expected earnings growth rate is 19.4%. The stock holds a Zacks Rank #2 at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.
Masimo’s long-term expected earnings growth rate is 14.8%. The stock has a Zacks Rank #2 at present.
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