TMO - Embedded Expectations Analysis - 2021 03 17
Thermo Fisher Scientific Inc. (TMO:USA) currently trades near historical highs relative to UAFRS-based (Uniform) earnings, with a 19.5x Uniform P/E. Even at these levels, the market has bearish expectations for the firm, and management may have concerns about the sustainability of demand, their ability to sustain margin expansion, and the potential of their investmentsSpecifically, management may lack confidence in their ability to sustain adjusted operating margin expansion, further increase their installed base size, and capitalize on long-term growth opportunities. Furthermore, they may be exaggerating the potential of their cryo-electron microscopes, their position to grow rapidly in the future, and the capabilities of their high-growth bioproduction investments. Moreover, management may lack confidence in their ability to maintain booking improvements, continue gaining market share, and sustain Life Science Solutions revenue following the distribution of vaccine and related solutions. Finally, they may have concerns about the sustainability of PCR testing demand, the pandemic's impact on margins, and the sustainability of their investments in COVID-related activities
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.
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- 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
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- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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