Thermo Electron (TMO ) posted fourth-quarter adjusted earnings per share of 38 cents. JP Morgan downgraded the shares to neutral from overweight.
Analyst Tycho Peterson says that with Thermo's results generally mixed, he downgraded the shares to reflect a more modest EPS outlook for 2005 (guidance of $1.40 to $1.45 vs. his, and the analyst consensus, estimate of $1.48) and what he believes is now the stock's fair valuation. Peterson says fourth-quarter adjusted EPS of 38 cents grew 15% vs. 33 cents in the year-earlier quarter, but was once cent below his, and the consensus, estimate. He notes strong sales were offset by higher costs (SG&A in particular). The analyst says revenues exceeded his forecast, but organic revenues only grew 3% vs. 9% in the third quarter. He cut his $1.47 2005 EPS estimate to $1.43, and sees $1.63 for 2006.