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What's in Store for Thermo Fisher (TMO) in Q1 Earnings?

Thermo Fisher Scientific Inc. TMO is slated to release first-quarter 2024 results on Apr 24, 2024, before market open.

Thermo Fisher’s earnings of $5.67 per share in the last reported quarter topped the Zacks Consensus Estimate by 0.5%. Its earnings surpassed estimates in three of the trailing four quarters, the average negative surprise being 0.26%.

Let's discuss the factors that are likely to be reflected in the upcoming results.

Factors at Play

Thermo Fisher’s Analytical Instruments segment is expected to have generated strong sales in the first quarter of 2024, banking on the electron microscopy business growth. During the fourth quarter, in electron microscopy, Thermo Fisher launched the Thermo Scientific Metrios 6 S/TEM. This fully-automated system enables its customers to rapidly obtain large volumes of high-quality data from increasingly complex semiconductors to advanced development. We believe this development to have contributed to the company’s first-quarter revenues.

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Per our model, Thermo Fisher’s Analytical Instruments’ business projected first-quarter revenues are pegged at $1.89 billion, suggesting 9.7% growth year over year.

Thermo Fisher, during the fourth quarter, opened a customer experience center for battery manufacturing in Seoul to accelerate the development of the next generation of environmentally friendly energy solutions. We believe this move to have contributed to revenues in the first quarter.

Within the Life-Science Solutions segment, the company is expected to have registered a decline due to the runoff of pandemic-related revenues in this segment and lower levels of activity in the bioproduction business versus the year-ago quarter.

During fourth-quarter 2023, the company introduced the Gibco CTS Detachable Dynabeads — a next-generation Dynabeads platform to accelerate the manufacturing of life-changing cell therapies. In November 2023, TMO extended its ongoing partnership with Flagship Pioneering to develop and commercially scale multi-product platforms on an accelerated basis. This partnership has been expanded to include Flagship's network of businesses through the newly-formed strategic partnership, which makes use of the companies' knowledge in the fields of life science tools, diagnostics and services. We believe these developments to have contributed to the company’s top line in the to be reported quarter.

Per our model, the Life-Science Solutions’ business is expected to generate $1.86 billion in revenues for the first quarter, calling for a 28.8% decline year over year.

The Specialty Diagnostics segment (Clinical Diagnostics business from the molecular controls that go into testing kits) is expected to have registered positive contributions in the form of continued growth in the microbiology and transplant diagnostics businesses. Our model projects Specialty Diagnostics’ business to report $991.7 million in revenues in the quarter to be reported, suggesting a 10.5% fall year over year.

In specialty diagnostics, the company launched the first FDA-cleared assays for the risk assessment and clinical management of preeclampsia. In December 2023, Thermo Fisher introduced new sample preparation solutions to simplify and automate respiratory diagnostic testing. These developments are likely to have contributed to the company’s revenues in the quarter to be reported.

Thermo Fisher Scientific Inc. Price and EPS Surprise

 

Thermo Fisher Scientific Inc. Price and EPS Surprise
Thermo Fisher Scientific Inc. Price and EPS Surprise

Thermo Fisher Scientific Inc. price-eps-surprise | Thermo Fisher Scientific Inc. Quote

 

In this segment too, Thermo Fisher is experiencing a persistent decline in COVID testing-related demand and is expected to continue at much lower levels in 2024 as customer testing and therapy and vaccine demand decline. This is likely to have impeded TMO’s revenues in the first quarter.

Within the Laboratory Products and Services segment, the company is expected to have gained from strong productivity and volume leverage within the pharma services business and the research and safety market channel. Thermo Fisher is consistently making efforts to expand its bioproduction purification resin capacity, which is used in the mRNA manufacturing process.

The company’s manufacturing sites in China and Singapore support the enhancement of capacity for single-use technology. These new sites are intended to meet both the local and global demand from biopharma customers. Meanwhile, in South Korea, the company continues to enhance regional capabilities with customer-focused innovation centers for the semiconductor industry and biopharma customers.

During the fourth quarter, Thermo Fisher opened a customer experience center for battery manufacturing in Seoul to support its material science customers as they accelerate the development of the next generation of environmentally friendly energy solutions. We expect this development to have positively contributed to the company’s top-line growth in the first quarter of 2024.

Our model projects Laboratory Products and Services business to report $5.86 billion in revenues in the first quarter, indicating 1.6% growth year over year.

Q1 Estimates

The Zacks Consensus Estimate for first-quarter total revenues is pegged at $10.14 billion, suggesting a 5.3% fall from the prior-year quarter’s reported figure. The consensus mark for earnings is pegged at $4.71 per share, indicating a 6.4% decline from the year-ago quarter’s reported figure.

What Our Quantitative Model Predicts

Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here, as you will see below.

Earnings ESP: Thermo Fisher has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).

Stocks Worth a Look

Here are some medical stocks worth considering, as these have the right combination of elements to post an earnings beat this quarter:

High Tide HITI has an Earnings ESP of +175.00% and a Zacks Rank #1. The company is expected to release second-quarter fiscal 2024 results soon. You can see the complete list of today’s Zacks #1 Rank stocks here.

High Tide has an expected earnings growth rate of 100% for fiscal 2024. High Tide surpassed earnings in each of the trailing four quarters, the average being 91.67%.

ShockWave Medical SWAV has an Earnings ESP of +14.51% and a Zacks Rank #2. The company is due to release first-quarter 2024 results on May 13.

SWAV has an expected long-term earnings growth rate of 27.2%. ShockWave Medical surpassed earnings in three of the trailing four quarters and missed in one, the average beat being 13.55%.

Edwards Lifesciences EW currently has an Earnings ESP of +1.68% and a Zacks Rank #2. The company is scheduled to release its first-quarter 2024 results on Apr 25.

EW has a historical long-term earnings growth rate of 9.9%. In the trailing four quarters, Edwards Lifesciences delivered an average earnings surprise of 0.8%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Thermo Fisher Scientific Inc. (TMO) : Free Stock Analysis Report

Edwards Lifesciences Corporation (EW) : Free Stock Analysis Report

ShockWave Medical, Inc. (SWAV) : Free Stock Analysis Report

High Tide Inc. (HITI) : Free Stock Analysis Report

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