The Glaring Truth behind Thermo Fisher Scientific's Fundamentals
Analyst recommendations
As of March 30, 2016, Thermo Fisher Scientific (TMO) was trading at $140.79. In a Bloomberg survey of 22 brokerage firms reported on March 28, 2016, about 90.9% of the analysts surveyed rated the stock as a “buy,” and 9.1% rated it a “hold.” None of the firms gave the company a “sell” rating.
The table below lists the 16 brokerage firms that provided a target price for Thermo Fisher over the next 12 months. The consensus 12-month target price for the company is $154.47, amounting to a return potential of ~11%, compared to the company’s last price of $140.79 on March 24, 2016.
Thermo Fisher Scientific has been given a “buy” rating by more than 90% of the brokerage firms because the company is expected to outperform industry peers in the near future. It also received so many “buy” ratings because the company derives its revenues and profitability from a strong, diversified geographic presence and product portfolio, consisting of a number of breakthrough products that cover its medical device market segments, including medication management, safety products, and laboratory equipment.
Peer target prices
By comparison, peers Becton Dickinson (BDX), Abbott Laboratories (ABT), and Baxter International (BAX) have 12-month broker target prices of $163.1, $44.44, and $40.56, respectively. These target prices indicate return potentials of 9.5%, 8.8%, and 0.9%, respectively, in the next 12 months.
Investors might consider the First Trust Health Care AlphaDEX Fund (FXH), which has ~1.9% of its total holdings in Thermo Fisher Scientific.
In the next and final part, we’ll analyze the company’s current valuation.
Browse this series on Market Realist: