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Thermo Fisher (TMO) Rides on End Market Growth Amid Pandemic

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Recently, we issued an updated research report on Thermo Fisher Scientific, Inc. (TMO - Free Report) . The company is rapidly boosting its inorganic growth profile. The most recent takeover was that of Brammer Bio. Its strong focus on the emerging markets is also encouraging. The stock has a Zacks Rank #3 (Hold).

Thermo Fisher has outperformed its industry in the past six months. The stock has improved 28.7% compared with the industry’s 18.1% rise.

Thermo Fisher ended the third quarter of 2020 with better-than-expected numbers. The company delivered an outstanding quarterly performance, leveraging on its capacity to extend support amid the pandemic. In the quarter, it generated $2 billion of COVID-19 related revenues. We are encouraged about the exceptionally strong year-over-year revenue growth at Life Sciences Solutions and Specialty Diagnostics segments. Also, Laboratory Products and Services segment recorded solid growth.

In terms of end market, pharma and biotech registered growth on robust performance in bioproduction, pharma services, biosciences, and research and safety market channel businesses. In diagnostics and healthcare. despite significant headwinds due to a decrease in doctor visits and related testing, the company experienced exceptionally high demand for COVID-19 testing and was able to deliver 130% growth in the third quarter. Academic and government, following a dull second quarter, grew in low single digits.

In the third quarter, Thermo Fisher expanded its global pandemic response. This includes the launch of the Amplitude Solution to automate high-throughput PCR-based testing, significant capacity expansion for viral transport media production in Europe and introduction of two COVID-19 antibody tests that are currently available in the United States and Europe. The OmniPath ELISA antibody test received FDA’s EUA for the qualitative detection of total antibodies. EliA antibody test is now available to run on Phadia 250 instrument.

The company has been increasing its capacity to help governments and biopharma customers globally meet future demand for new therapies and vaccines.

In terms of PCR tests, the company holds a vital position given its gold standard PCR-based tests and installed base of instruments.

On the flip side, the COVID-19 headwinds impacted each of its end markets to varying degrees. Overall, the company saw significantly reduced customer activity due to work disruptions.

Thermo Fisher’s industrial and applied end market registered a low single-digit decline in the third quarter. Customers in this end market were significantly affected by business disruptions due to the pandemic.

Key Picks

Some better-ranked stocks from the broader medical space are Hologic, Inc. (HOLX - Free Report) , IDEXX Laboratories, Inc. (IDXX - Free Report) and Patterson Companies, Inc. (PDCO - Free Report) .

Hologic’s long-term earnings growth rate is estimated at 17.4%. The company presently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

IDEXX’s long-term earnings growth rate is estimated at 15.8%. It currently carries a Zacks Rank #2 (Buy).

Patterson’s long-term earnings growth rate is estimated at 11.1%. The company presently carries a Zacks Rank #2.

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