GE Healthcare had revenue of $13.1 billion for the first nine months of 2013, which it expects to come to almost $17 billion for the full year. While GE Healthcare is larger than TMO by revenue, it has a broader product line including radiology equipment and health IT solutions where TMO doesn't compete.
The net result of the deal, and the completion of the Life acquisition, is to make TMO closer in size to GE Healthcare, but more tightly focused than its larger rival. Most analysts like the TMO story, with 12 out of 16 rating it a buy or overweight and none rating it an underweight or sell.
The one question analysts have is whether TMO will continue the Life policy of investing heavily in research after the acquisition. If it doesn't, it could show a higher bottom line in the short term in exchange for long-term growth. If it does, the growth in earnings may disappoint, leading to a fall in the share price.
So far analysts seem to be cheering the deal. ISI Group raised its target price on Thermo Fisher to $121.50 recently. The problem is that Thermo Fisher was trading at $110 before the deal. This could be a stock getting ahead of itself.
At the time of publication the author owned shares of GE.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.