This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Real Winners of Drug Experimentation

A Diverse Business Model Pays

In the picks-and-shovels universe, Invitrogen and Sigma-Aldrich focus on chemicals and 'consumables,' the products that researchers use and then throw out. Some companies concentrate on instruments, and others offer a mixture.

Diversified companies include Qiagen, Applied Biosystems and the biggest publicly traded life-science tool company, Thermo Fisher Scientific. Its market cap of $23.7 billion is triple the size of Sigma-Aldrich. Created in 2006 by the merger of Thermo Electron and Fisher Scientific, the Waltham, Mass.-based giant has unanimous buy ratings by the 10 analysts polled by Thomson First Call.

Thermo "does not see an economic slowdown impacting the industry," says a February research report from Thomas Weisel Partners. Fourth-quarter results beat Wall Street expectations for the fifth consecutive quarter since the merger, says analyst Peter Lawson, who has an overweight rating. "Thermo's outlook for 2008 appears solid." He doesn't own shares; his firm says it expects to seek or receive investment-banking compensation from Thermo in the next few months.

Thermo takes diversification well beyond its peers, providing products and/or services not only for medical and scientific R&D but also for industries as varied as beverages, coal mining, petroleum, semiconductors, cement and metals.

"The company's diversified revenue base, which includes a large recurring stream of consumables routinely used in labs, lessens its exposure to pharmaceutical capital spending cycles," says Morningstar analyst Alex Morozov in a recent research report.

"It does not appear that recessionary fears have affected its U.S. business," Morozov adds. "Its Asia Pacific business is growing gangbusters."

However, with shares recently trading a just few dollars under Morningstar's fair value estimate of $59, Morozov breaks with the buy recommendations of sell-side analysts, by advocating a neutral three-star rating for Thermo.

3 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Submit an article to us!
SYM TRADE IT LAST %CHG
ABI $22.98 1.01%
MIL $4.19 -0.95%
QGEN $24.14 1.60%
SIAL $138.88 0.12%
TMO $127.01 0.28%

Markets

DOW 17,843.62 -84.58 -0.47%
S&P 500 2,082.00 -7.46 -0.36%
NASDAQ 4,923.6680 -15.6590 -0.32%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs