TMO - Embedded Expectations Analysis - 2020 12 11
Thermo Fisher Scientific Inc. (TMO:USA) currently trades near historical highs relative to UAFRS-based (Uniform) earnings, with a 23.1x Uniform P/E. At these levels, the market has expectations for profitability to remain stable, but management may have concerns about demand sustainability, their ability to maintain revenue growth, and the potential of their OmniPath ELISA testSpecifically, management may lack confidence in their ability to sustain coronavirus-related revenue growth, meet bioscience demand across the Asia-Pacific region, and maintain adjusted gross margins. Furthermore, they may have concerns about the potential of their OmniPath ELISA test and their single use bioproduction technologies, as well as the sustainability of their PCR testing demand. Management may also have concerns about FX headwinds and rising interest expenses
Thermo Fisher Scientific is engaged in serving science. The company's segments include: Life Sciences Solutions, which provides reagents, instruments and consumables used in biological and medical research, discovery and production of new drugs and vaccines as well as diagnosis of disease; Analytical Instruments, which provides instruments, consumables, software and services that are used for a range of applications in the laboratory, on the production line and in the field; and Specialty Diagnostics, which provides diagnostic test kits, reagents, culture media, instruments and associated products for customers in healthcare, clinical, pharmaceutical, industrial, and food safety laboratories.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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