Thursday, December 26, 2013

The Motley Fool: Thermo Fisher Scientific May Be Hard Pressed To Outperform

To be clear from the outset, I'm a fan of Thermo Fisher Scientific Inc. (NYSE: TMO  ) , and I believe the company's impending acquisition of Life Technologies Corp. (NASDAQ: LIFE  ) will be a transformative deal for a company with a long history of strong M&A moves. With this deal, Thermo Fisher will operate on a scale that the likes of VWR, Merck KGaA, Agilent, and Waters cannot match, and the company will have the resources to challenge companies like Illumina (NASDAQ: ILMN  ) , Becton Dickinson, and Danaher in their growth markets to the extent management wishes to invest.

The question is price. This has been a good year for anything "bio", but Themo Fisher has outperformed almost everybody else in the sector with a 70% jump in the last twelve months. Even with a double-digit multiple to EBITDA and/or strong long-term mid-single digit free cash flow growth, it is hard to call these shares a bargain. Thermo Fisher has a good history of drawing more value than expected from its M&A transactions, but that seems to be the base case assumption here rather than the upside.

Please read the full article at The Motley Fool:

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