Goldman Sachs Upgrades Thermo Fisher Scientific (TMO) to Buy

February 20, 2014 7:16 AM EST
Get Alerts TMO Hot Sheet
Price: $483.56 +0.23%

Rating Summary:
    23 Buy, 3 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 11 | Down: 8 | New: 73
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Goldman Sachs upgraded Thermo Fisher Scientific (NYSE: TMO) from Neutral to Buy with a price target of $153.00 (from $114.00).

Analyst Isaac Ro said, "Although TMO shares have outperformed over the past 12 months (+4,500bps vs. S&P 500 and +3,100bps vs. XLV), we think consensus still underappreciates Thermo's long-term growth profile and potential for continued multiple expansion."

"Catalyst (1) Better than expected organic growth: Outsized scale and pricing power should help drive long-term organic growth of 5%, 100bps ahead of consensus. Also, key LIFE assets have languished and present an underappreciated source of upside in our view. (2) Better than expected EPS growth: Our bottom-up analysis leads us to model cost synergies that are 40% above guidance. Post-delevering, we see additional EPS power via share repurchase. We raise estimates accordingly. (3) End markets improving as TMO emerges better positioned: Government funding is improving as US austerity fades, EU has stabilized, and Japan Stimulus buttresses demand. In Biopharma, R&D is healthy, drug production is ramping, and TMO is gaining share. Finally, China funding for Tools remains stable and TMO has material scale advantages in the region. (4) Undemanding valuation: Tools are now less relevant comps given TMO's size. TMO is 1 of just 11 in large cap healthcare with a sub 1x PEG," he added.

For an analyst ratings summary and ratings history on Thermo Fisher Scientific click here. For more ratings news on Thermo Fisher Scientific click here.

Shares of Thermo Fisher Scientific closed at $121.81 yesterday.


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