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Why Hold Strategy is Apt for Thermo Fisher (TMO) Stock Now
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Thermo Fisher Scientific, Inc. (TMO - Free Report) , headquartered in Waltham, MA is a scientific instrument maker and a world leader in serving science. It has rallied 13.5% over the past three months, ahead of the S&P 500’s mere 4.3% gain. The stock has a market cap of $68.7 billion.
The company’s share price also outperformed the Zacks categorized Medical - Instruments sub-industry’s increase of 10.3% over this period. This Zacks Rank #3 (Hold) stock exhibits some solid growth prospects.
The market is particularly upbeat about the company’s consistent acquisition activities to drive growth inorganically. Last month, the company agreed to acquire Netherlands-based Patheon N.V., a global provider of high-quality drug solutions to pharmaceutical and biopharma sectors.
Thermo Fisher considers this buyout a strategic fit to expand its biopharma services in Europe. Per management, the combination should significantly strengthen the company’s unique value proposition for Pharmaceutical and Biotech Customers by adding highly complementary services. This apart, the takeover of FEI has started to contribute to Thermo Fisher’s analytical instruments portfolio.
The company also plans to brace its foothold in the emerging markets. In India, Thermo Fisher is currently working on tapping into the growth opportunities in biopharma, healthcare and food safety markets. In China, the company is performing well in the markets under key focus like biopharma, healthcare and environment. In South Korea, the company has recently opened a BioPharma Services facility to meet the rising demand for clinical trials.
We are currently looking forward to Thermo Fisher’s five-year plan, introduced in 2016. The plan outlines investments in innovation, healthcare and environment.
Additionally, the company has a strong cash balance, enabling it to adopt attractive share repurchase programs and in turn, provide some solid returns to the investors.
On the flip side, the fact that Thermo Fisher derives most of its revenues from the international market exposes it to foreign currency fluctuations. Management currently estimates an unfavorable foreign exchange to impact its top line in 2017.
Stiff competition and hostile macroeconomic conditions continue to weigh on the stock as major headwinds. Thermo Fisher faces different categories of competitors including a broad range of manufacturers and third-party distributors on account of its diversified portfolio. This competitive landscape is quite tough to tide over with changing technology and customer demand requiring a continual research and development.
Align Technology has an expected long-term adjusted earnings growth of almost 24.1%. The stock has roughly added 32.3% over the last three months.
Inogen has long-term expected earnings growth rate of 17.5%. The stock has alomst added 26.2% over the last three months.
Accelerate Diagnostics has an expected long-term adjusted earnings growth of 30%. The stock has gained roughly 24.5% over the last three months.
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Why Hold Strategy is Apt for Thermo Fisher (TMO) Stock Now
Thermo Fisher Scientific, Inc. (TMO - Free Report) , headquartered in Waltham, MA is a scientific instrument maker and a world leader in serving science. It has rallied 13.5% over the past three months, ahead of the S&P 500’s mere 4.3% gain. The stock has a market cap of $68.7 billion.
The company’s share price also outperformed the Zacks categorized Medical - Instruments sub-industry’s increase of 10.3% over this period. This Zacks Rank #3 (Hold) stock exhibits some solid growth prospects.
The market is particularly upbeat about the company’s consistent acquisition activities to drive growth inorganically. Last month, the company agreed to acquire Netherlands-based Patheon N.V., a global provider of high-quality drug solutions to pharmaceutical and biopharma sectors.
Thermo Fisher Scientific Inc Price
Thermo Fisher Scientific Inc Price | Thermo Fisher Scientific Inc Quote
Thermo Fisher considers this buyout a strategic fit to expand its biopharma services in Europe. Per management, the combination should significantly strengthen the company’s unique value proposition for Pharmaceutical and Biotech Customers by adding highly complementary services. This apart, the takeover of FEI has started to contribute to Thermo Fisher’s analytical instruments portfolio.
The company also plans to brace its foothold in the emerging markets. In India, Thermo Fisher is currently working on tapping into the growth opportunities in biopharma, healthcare and food safety markets. In China, the company is performing well in the markets under key focus like biopharma, healthcare and environment. In South Korea, the company has recently opened a BioPharma Services facility to meet the rising demand for clinical trials.
We are currently looking forward to Thermo Fisher’s five-year plan, introduced in 2016. The plan outlines investments in innovation, healthcare and environment.
Additionally, the company has a strong cash balance, enabling it to adopt attractive share repurchase programs and in turn, provide some solid returns to the investors.
On the flip side, the fact that Thermo Fisher derives most of its revenues from the international market exposes it to foreign currency fluctuations. Management currently estimates an unfavorable foreign exchange to impact its top line in 2017.
Stiff competition and hostile macroeconomic conditions continue to weigh on the stock as major headwinds. Thermo Fisher faces different categories of competitors including a broad range of manufacturers and third-party distributors on account of its diversified portfolio. This competitive landscape is quite tough to tide over with changing technology and customer demand requiring a continual research and development.
Key Picks
Other top-ranked medical stocks are Align Technology, Inc. (ALGN - Free Report) , Inogen, Inc. (INGN - Free Report) and Accelerate Diagnostics, Inc. (AXDX - Free Report) . Both Align Technology and Inogen sport a Zacks Rank #1 (Strong Buy), while Accelerate Diagnostics carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Align Technology has an expected long-term adjusted earnings growth of almost 24.1%. The stock has roughly added 32.3% over the last three months.
Inogen has long-term expected earnings growth rate of 17.5%. The stock has alomst added 26.2% over the last three months.
Accelerate Diagnostics has an expected long-term adjusted earnings growth of 30%. The stock has gained roughly 24.5% over the last three months.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>