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Why Third Point sold its stake in Thermo Fisher Scientific

Smita Nair

Must-know update: Third Point's positions in 4Q 2013 (Part 6 of 8)

(Continued from Part 5)

Thermo Fisher Scientific, Inc. (TMO) was a 3.49% position that Third Point sold out last quarter. The position was initiated in 1Q 2013. The company provides analytical instruments, laboratory equipment, software, services, consumables, reagents, chemicals, and supplies to pharmaceutical and biotech companies, hospitals, and clinical diagnostic labs. The stock was up 70% in 2013.

Thermo Fisher recently completed its $13.6 billion acquisition of genetic testing equipment maker Life Technologies Corporation (LIFE). The company established a new reporting segment called Life Sciences Solutions, which will consist of the majority of the former Life Technologies and Thermo Fisher Biosciences businesses. As a pre-condition for antitrust approval to the above deal, Thermo Fisher agreed to sell its cell culture (sera and media), gene modulation, and magnetic beads businesses to GE Healthcare for $1.06 billion.

The combination of Thermo Fisher and Life Technologies builds on both companies’ technological strengths to accelerate results for life sciences customers working in proteomics, genomics, and cell biology. Life Technologies is known for its next-generation sequencing capability, and also has a range of technologies for bioproduction and forensics applications. The combined company is expected to challenge peer Illumina (ILMN) in the advanced genetic testing market. The combined company will also build on its strong foothold in Asia-Pacific, particularly in China, to meet increasing customer demand in life sciences and healthcare.

For 4Q 2013, Thermo Fisher Scientific grew full year adjusted earnings per share (EPS) by 10% to $5.42, and fourth quarter adjusted EPS by 5% to a $1.43. The company increased fourth quarter revenue by 6% to a $3.47 billion from $3.26 billion in 4Q 2012 driven by robust sales across its laboratory equipment, analytical technologies and specialty diagnostics businesses.. The earnings and revenue beat analyst estimates.

For fiscal 2014, Thermo Fisher said it expects adjusted earnings per share in the range of $6.70 to $6.90, representing an increase of 24% to 27% over 2013. The company expects to achieve 2014 revenue in the range of $16.63 billion to $16.83 billion.

Analysts are currently bullish about the stock.

Continue to Part 7

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