Analyst Tom Gallucci at Merrill Lynch said any acquisitions likely to be in the life sciences arena and be in the $50-$250 million range.
After buying cell culture media and bioresearch tool specialist Perbio last summer, Fisher had said it was going to concentrate on reducing its debt. However, it has since completed a successful secondary offering - raising around $150 million - and now has a much-improved financial flexibility that could put it on the lookout for acquisition candidates once again, according to Gallucci.
Fisher has just reported fourth quarter sales up 18.8 per pent year-on-year to $977 million, with earnings before income tax (EBIT) up more than 24 per cent to $76.3 million. The expenses related to the Perbio acquisition pegged back net income to $18.6 million or 28 cents a share, down from $28.9 million ($0.46) in fourth-quarter 2003.
Cash from operations reached $218 million for the full-year, 15 per cent ahead of Merrill Lynch's prediction of $185-$195 million, and this ability to generate cash is a particular strength of the company that differentiates it from its peers.
For the full year, Fisher's sales totalled $3.56 billion, a 10.1 per cent increase over 2002, while net income for the full year increased 39.6 per cent to $143.0 million.
Fisher's products and services used for scientific research, drug discovery and drug development applications achieved revenues of $697 million in the quarter, up 24 per cent. Sales from the cell-culture and bioresearch divisions of Perbio and an increase in sales in the US offset slower growth internationally, said the company.
Healthcare sales totaled $235.0 million, a 13.3 per cent increase compared with last year's fourth quarter. Strong demand for products sold to clinical labs (both hospital and reference) and sales from the medical-device division of Perbio boosted sales growth in the period.
Finally, fourth-quarter sales in the laboratory-workstations segment decreased to $50.0 million from $58.3 million in the prior year, primarily due to a $12 million homeland-security project in the fourth quarter of 2002 that was not repeated in 2003.
The company said that its clinical packaging business, acquired from Covance in February 2001, continues to grow at a double digit rate. The company recently expanded capacity in the segment in response to the strong growth.
For 2004, Fisher is raising the lower end of its previously issued full-year EPS guidance of $2.65-$2.80 to a new range of $2.70-$2.80, thanks to continued strength in the scientific-research and healthcare markets, partially offset by a first-half slowdown in the laboratory-workstations segment.
Pharma, biotech, and industrial company R&D spending are all primary factors affecting Fisher's business. At the Merrill Lynch Pharmaceutical Services Conference yesterday, Paul Meister, Vice Chairman the company, said that on the whole healthcare R&D spending has grown while industrial spending has been flattish.
Pharma spend has been mixed but up overall, he said, with weakness experienced in biotech area during 2003 but signs of strength seen later in the year.
Separately, Gallucci notes that President George W Bush's 2005 budget called for roughly 3 per cent growth in federal government R&D spending, which is down from more robust levels recently.