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In this article, I will feature one healthcare stock that has seen intensive insider selling during the last 30 days. Intensive insider selling can be defined by the following three criteria:

  1. The stock was sold by three or more insiders within one month.
  2. The stock was not purchased by any insiders in the month of intensive selling.
  3. At least two sellers decreased their holdings by more than 10%.

Thermo Fisher Scientific (NYSE:TMO) provides analytical instruments, equipment, reagents and consumables, software, and services for research, manufacture, analysis, discovery, and diagnostics.

(click to enlarge)

Insider selling during the last 30 days

Here is a table of Thermo Fisher's insider-trading activity during the last 30 days by insider.

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Thomas LoewaldSVPFeb 622,437No40,483 shares + 12,313 options29.8%
Peter WilverCFOFeb 6-791,897No104,305 shares46.8%
Jim ManziDirectorFeb 66,000No48,397 shares11.0%
William ParrettDirectorFeb 618,000No11,188 shares61.7%

There have been 138,334 shares sold by insiders during the last 30 days.

Insider selling by calendar month

Here is a table of Thermo Fisher's insider-trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
February 2014138,3340
January 201400
December 201300
November 201300
October 201300
September 20134,0000
August 20134,0000
July 201380,7000
June 2013261,8070
May 201341,4600
April 201300
March 20134,7610
February 20135,7560
January 2013105,2800

There have been 646,098 shares sold, and there have been zero shares purchased by insiders since January 2013.

Financials

Thermo Fisher reported the full-year 2013 financial results on January 30 with the following highlights:

Revenue$13.1 billion
Net income$1.3 billion
Cash$5.8 billion
Debt$10.5 billion

Outlook

Thermo Fisher's 2014 guidance is as follows:

Revenue$16.63-$16.83 billion
EPS$6.70-$6.90

Competition

Thermo Fisher's competitors include Agilent Technologies (NYSE:A), and Becton, Dickinson and Company (NYSE:BDX). Here is a table comparing these companies.

CompanyTMOABDX
Market Cap:42.61B19.72B21.37B
Employees:39,00020,60030,000
Qtrly Rev Growth (yoy):0.06-0.030.06
Revenue:13.09B6.78B8.13B
Gross Margin:0.440.520.52
EBITDA:2.79B1.39B2.11B
Operating Margin:0.140.150.20
Net Income:1.28B724.00M930.00M
EPS:3.482.104.73
P/E:33.8028.3023.26
PEG (5 yr expected):1.301.941.95
P/S:3.162.852.60

Thermo Fisher has the highest P/S ratio among these three companies.

Here is a table of these competitors' insider-trading activities during the last 12 months.

CompanyInsider buying / sharesInsider selling / shares
A0665,626
BDX0142,842

Only Thermo Fisher has seen intensive insider selling during the last 30 days.

Conclusion

There have been four different insiders selling Thermo Fisher, and there have not been any insiders buying Thermo Fisher during the last 30 days. All four of these insiders decreased their holdings by more than 10%. Thermo Fisher has an insider ownership of 0.30%.

Before going short Thermo Fisher, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are relatively high P/S ratio, and the intensive insider-selling activity.

Source: Thermo Fisher: 4 Different Insiders Have Sold Shares This Month