Why Thermo Fisher Scientific Inc. Shares Are Up

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Thermo Fisher Scientific (NYSE: TMO  ) gained about 1.5% in pre-market trading, and the stock remains in positive territory after Goldman Sachs upgraded the health care instrument company from neutral to buy.

So what: Along with the upgrade, analyst Isaac Ro boosted his price target to $153 (from $114), representing about 26% worth of upside to yesterday's close. While contrarians might be turned off by Thermo's share-price strength over the past year, Ro believes there's plenty of room to run given the long-term growth tailwinds continuing to work in the company's favor.

Now what: Goldman sees significant positives ahead for Thermo:

"Catalyst (1) Better than expected organic growth: Outsized scale and pricing power should help drive long-term organic growth of 5%, 100bps ahead of consensus. ... (2) Better than expected EPS growth: Our bottom-up analysis leads us to model cost synergies that are 40% above guidance. ... (3) End markets improving as TMO emerges better positioned: Government funding is improving as US austerity fades, EU has stabilized, and Japan Stimulus buttresses demand," noted Ro.

When you couple those positive trends with Thermo's still-reasonable forward P/E of 15, it's tough to disagree with Goldman's bullishness. 

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