COMPANY DESCRIPTION

Thermo Fisher Scientific is a provider of analytical instruments, equipment, reagents and consumables, software and services for research, manufacturing, analysis, discovery and diagnostics. Markets served by Co. include pharmaceutical and biotech companies, hospitals and clinical diagnostic labs, universities, research institutions and government agencies, as well as environmental and industrial process control settings. Co. serves its customers through its four brands: Thermo Scientific, Life Technologies, Fisher Scientific and Unity Lab Services. Co. has four business segments: Life Sciences Solutions; Analytical Technologies; Specialty Diagnostics; and Laboratory Products and Services.

 

ECONOMIC MOAT

TMO’s moat comes from an enormous manufacturing, sales, and distribution infrastructure and broad product offerings from scientific instruments and lab equipment to software and services. TMO markets itself as a one-stop shop for its research customers, an appealing feature for laboratories looking to simplify procurement functions. TMO has dominant positions within its product lines, particularly instrumentation. Its instruments have significant switching costs resulting from costly up-front investments in equipment (up to and exceeding $1 million) and training.

 

OUTLOOK

The company has been expanding of late. In addition to the Life Technologies (he largest acquisition in the company's history) purchase, Thermo Fisher launched a number of significant new products across its specialty diagnostics, analytical instruments, and life sciences businesses. This expansion has led to a more leveraged balance sheet. TMO now holds over $12.3 billion in long-term obligations. These shares are best suited for aggressive investors looking to outperform over the next six to 12 months.

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STRENGTHS

  • Diverse product portfolio

  • Broad customer base

  • Robust global footprint 

WEAKNESSES

  • Heavy dependence on third-party package-delivery services

  • Significant level of indebtedness 

THREATS

  • Fierce competition

  • Rules and regulations by federal, state and foreign agencies

  • Healthcare reform law may affect results of operations 

OPPORTUNITIES

  • Strategic acquisition of Life Technologies Increased focus on Asian markets

  • Growing medical device market in the US 

The above report is for information purposes only, and is not a solicitation or offer to buy or sell any securities. Past performance is no guarantee of future performance. Neither diversification nor asset allocation ensures a profit or guarantees against loss. Before investing, investors should consider their risk tolerance, investment objectives, time horizon, available capital, and charges and expenses.  

 

The information presented in this report has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guranteed. All material is subject to change without notice. The views and opinions expressed are those of Focused Stock Research and/or WALT ST Investment Management, Ltd. and in no way reflect the views and opinions of Investment Consultants nor their Broker Dealers.

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