ThermoFisher (TMO) : Growth or Value?

Is there anybody who does not like ThermoFisher (TMO)stock?

Thermofisher (TMO) has more fans than U2, Lady GaGa and Rihanna combined. Why is that? We are trying to find out.TMO is a life science tools conglomerate with revenues of $10.8B and Net Income of $1.036B for 2010. They are financial engineers adept at M&A, buying and selling companies and product lines to make their numbers. They sell virtually everything in every life science lab: scientific instruments,diagnostics,software, reagents etc.

For starters look at this:

  • Recent analyst opinions range from 9 strong buys, 7 buys and 1 hold.It is the second most favorite healthcare stock.
  • Revenue estimates  are in the $11.5B range for 2011 with an EPS above $4, a 14.3% increase above 2010 with a PE of 13.69 compared to a current PE of  21.85. The forecasted PEG puts the stock in the value category at 1.13.
  • Cash flow from operations have been up the last three quarters from $283M to $438M but a lot of free cash flow has gone to purchase stock($165M to $325M).
  • The 52 week range for the stock is $41.74-$58.16 but the stock is flat over one year. Over five years the stock is up 49.2% vs 2.78% for the S&P 500 and 19.6% for the NASDAQ Index.
  • The institutional ownership is 91%.
  • Even the blogs love it with no detractors and every financial pundit recommending the stock.
  • The shareholder equity is flat over the last 4 quarters at about $15.4B.
  • Agilent (A) is a comparable at $15.7B market cap vs $21.6B for TMO. Danaher (DHR) who recently acquired Beckman(BEC)  is also a comparable at $34.4B.
  • The Company does not pay a dividend.

Is ThermoFisher a growth stock or  a value stock and what is the long term strategy? We’ll find out more after the Q1 2011 earnings report. We are also trying hard to find a contrary opinion.

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