New Trade for April 6th, 2021

Stocks were slightly lower in early trading after another record breaking session for the S&P 500 and the Dow yesterday. 

An aging population, increasing wealth, government focus on healthcare infrastructure and expansion of medical insurance coverage make these markets a happy hunting ground for global medical instruments stocks.  

Particularly, companies that have invested in virtual physician education, remote clinical support and digital sales enablement suitable for healthcare support amid the pandemic are riding on huge market adoption of their COVID-19-related healthcare-support products and services will likely do well.  

Our trade alert for today highlights one such company for investors looking to reap the benefits of the medical device market that Health Care News suggests is witnessing a compound annual growth rate of 25%.  

Thermo Fisher Scientific (TMO) is known as the “Amazon of the healthcare industry” because of its wide-ranging portfolio of life sciences products, analytics and laboratory instruments.

As such, it has been highly active on the front lines of the fight against COVID-19.  But then, it has always been forced to innovate to keep up with the needs of the immensely creative scientists who make up its customer base.

More than a few Wall Street pros are optimistic over the firm’s prospects.  Of the analysts tracked by S&P Global Market Intelligence who cover TMO, 14 rate it at Strong Buy, five say Buy and four have it at Hold.  What’s more, over the past three months positive revisions to analyst recommendations indicate analysts growing optimism, three months ago just 10 analysts were calling TMO a Buy.  Their current average price target of $556.86 gives the stock implied upside of about 23% over the next 12 months or so.

Sel Hardy, equity analyst at CFRA Research, rates TMO at “Strong Buy,” citing an “impressive” fourth quarter with “very strong” top- and bottom-line results.

“Sales growth was broad based across segments and regions as the base business continued to see a rapid recovery,” Hardy writes note to clients.  “2021 appears to be another great year for TMO.  We expect the demand for testing to continue to remain very strong in the first half.”

The stock looks compelling for those with longer horizons, as well, Argus Research argues.

“Thermo is seeing strong demand for COVID-19 testing solutions as well as for instruments and supplies used by developers of vaccines and other treatments,” writes analyst David Toung (Buy). “But the company is also investing its substantial cash flow in technology upgrades, capacity expansions and acquisitions.”

The Street forecasts TMO to generate average annual EPS growth of more than 13% over the next three to five years.

Where to invest $1,000 right now...

Before you consider buying Thermo Fisher Scientific, you'll want to see this.

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