Thermo Fisher shares poised to recover - Barron's

NEW YORK, May 24 (Reuters) - Shares of scientific equipment maker Thermo Fisher Scientific Inc (TMO.N) are poised to recover after tumbling more than 40 percent in the past year, according to a report in Barron's.

Now that its earnings forecasts for 2009 have been damped down from aggressive to "more-reasonable levels," the stock "is now available at an attractive price," the business weekly said in its May 25 issue.

Since the conclusion of the 2006 deal between Thermo Electron and Fisher Scientific that created the company, free cash flow has jumped to $1.2 billion in 2008, a level Thermo Fisher expects to meet or slightly exceed in 2009.

That outlook comes despite an expected dip in earnings.

"This essentially means the company converts nearly all earnings to free cash flow -- a sign of a potent business model," the paper said. "Assuming free cash flow gets to the anticipated $2.80 a share, the stock would sport a free-cash-flow yield above 7.5 percent.

The paper said that the federal government's stimulus package contains an allocation of billions for research and development programs which "could supply a positive jolt to demand."

"If there's increasing confidence that the company can reassert its growth path, the shares would easily merit a price/earnings multiple of 14 or better, which could push the stock up into the mid-40s as 2010 rolls into sight," it said.

The company's shares closed at $36.26 on Friday. (Reporting by Franklin Paul)