New Acquisition Adds To Thermo Fisher's Specialty Dx Portfolio, Analyst Says

  • Thermo Fisher Scientific Inc TMO agreed to acquire The Binding Site from Private Equity Nordic Capital for $2.6 billion, implying an 11x 2023E sales of $242 million. 
  • SVB Securities maintains an Outperform rating on the stock.
  • The Binding Site is expected to deliver $220 million in 2022. 
  • SVB writes that 11x 2023E sales appear much higher vs. the 6x that Thermo Fisher paid for Phadia ($3.5 billion) in 2011. Phadia had 1,500 employees at the time of acquisition vs. Binding Site's 1,100.
  • But the analyst notes that amid dwindling COVID testing sales, the company is deploying its COVID cash to strengthen its Speciality Dx portfolio overall. 
  • TMO also announced $1 billion in share repurchases for 4Q22, having repurchased $2 billion in shares in 1Q22.
  • SVB sees this transaction as a positive for the diagnostics sector overall, but it's important to note that Binding Site has both instruments (analyzers) and immunoassay kits in addition to multiple myeloma kits. 
  • Freelite is a standard of care and the only light chain assay in national and international guidelines, including NCCN (National Comprehensive Cancer Network) and ESMO (European Society of Medical Oncology). Among the coverage universe, SVB sees Hologic Inc HOLX and Quanterix Corp QTRX having instruments, assays, and a growing Dx platform.
  • Price Action: TMO shares are up 1.61% at $511.97 on the last check Monday.
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