News

Thermo Fisher Scientific Inc. TMO is slated to release fourth-quarter 2023 results on Jan 31, 2024, before market open.

Thermo Fisher’s earnings of $5.69 per share in the last reported quarter topped the Zacks Consensus Estimate by 1.9%. Its earnings surpassed estimates in three of the trailing four quarters, the average surprise being 0.62%.

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

Factors at Play

Like the last quarter, Thermo Fisher’s Analytical Instruments segment is expected to have generated strong sales in the fourth quarter, banking on chromatography and mass spectrometry and the electron microscopy businesses. Per our model, Thermo Fisher’s Analytical Instruments’ business projected fourth-quarter revenues are pegged at $1.95 billion, suggesting 3.7% growth year over year.

In October 2023, Thermo Fisher expanded its manufacturing capacity at the St. Louis site. The increased capability will support biological therapies for diseases ranging from cancers to autoimmune conditions to rare genetic disorders. We believe this move to have contributed to revenues in the fourth quarter.

Within the Life-Science Solutions segment, the company is expected to have registered a decline due to moderation in pandemic-related revenues. Unfavorable macroeconomic conditions and foreign currency fluctuations might have impeded growth in the fourth quarter.

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 this development to have contributed to the company’s top line in the fourth quarter.

Per our model, the Life-Science Solutions’ business is expected to generate $2.07 billion in revenues for the fourth quarter, calling for a 32.1% 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 $1.14 billion in revenues in the quarter to be reported, suggesting 2.1% growth year over year.

In December 2023, Thermo Fisher entered into an exclusive distribution agreement with Aesku. Group (“Aesku”) to market, sell and support their portfolio of FDA-cleared IFA products, automated instruments and software in the United States. In October 2023, the company entered into a companion diagnostic (CDx) partnership with Boehringer Ingelheim to support emerging precision therapies and improve patient outcomes by increasing access to reliable genomic testing required to match patients with targeted cancer treatments. 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 is experiencing a persistent decline in COVID testing-related demand and is expected to continue at much lower levels in 2023 as customer testing and therapy and vaccine demand decline. This is likely to have impeded TMO’s revenues in the fourth 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 recent launch of CorEvidence-Thermo Fisher’s proprietary cloud-based data lake platform, optimizing pharmacovigilance case processing and safety data management processes, is likely to have made a strong contribution to the top line in the fourth quarter.

Further, in September 2023, Thermo Fisher launched Gibco CTS Detachable Dynabeads. The next-generation platform of Dynabeads comes with the first-of-its-kind active release mechanism for clinical trials and commercial manufacturing use. This is likely to have contributed to the company’s Q4 performance.

Our model projects Laboratory Products and Services business to report $6.12 billion in revenues in the fourth quarter, indicating 3% growth year over year.

Q4 Estimates

The Zacks Consensus Estimate for fourth-quarter total revenues is pegged at $10.74 billion, suggesting a 6.2% fall from the prior-year quarter’s reported figure. The consensus mark for earnings is pegged at $5.64 per share, indicating a 4.4% rise 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 #3.

Other Stocks Worth a Look

Here are some medical stocks worth considering as these have the right combination of elements to post earnings beat this reporting cycle.

SiBone SIBN has an Earnings ESP of +0.89% and a Zacks Rank #2. The company is expected to release fourth quarter 2023 results in February 2024. You can see the complete list of today’s Zacks #1 Rank stocks here.

SiBone has a long-term expected earnings growth rate of 15.2%. SIBN surpassed earnings in each of the trailing four quarters, the average being 24.21%.

Merit Medical Systems MMSI has an Earnings ESP of +0.34% and a Zacks Rank #2. The company is due to release fourth-quarter 2023 results on Feb 28, 2024.

MMSI has an expected long-term earnings growth rate of 11.5%. The company surpassed earnings in each of the trailing four quarters, the average being 14.41%.

ACADIA Pharmaceuticals ACAD currently has an Earnings ESP of +15.18% and a Zacks Rank #2. The company is expected to release its fourth quarter of 2023 results in February 2024.

ACAD has a remarkable 2024 earnings growth rate of 415.2%. In the trailing four quarters, the company delivered an average earnings surprise of 20.7%.

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

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.