Thermo Fisher (TMO) Up 2.3% Since Last Earnings Report: Can It Continue?

It has been about a month since Thermo Fisher Scientific (TMO) last reported earnings. Shares rose about 2.3% in that time, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Thermo Fisher headed for a recession? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the most recent earnings report in order to get a better handle on the key drivers.

Thermo Fisher’s Best Earnings Estimates for Q1, 2024 View Up

Thermo Fisher Scientific Inc. adjusted earnings per share (EPS). first-quarter 2024 earnings of $5.11, missing the Zacks Consensus Estimate by 8.7%. This number also increased by 1.6% year-on-year.

The adjusted figure excludes certain one-off expenses, including asset depreciation costs and certain restructuring costs.

GAAP EPS was $3.46, up 4.2% year-over-year.

Revenues in detail

Revenue for the quarter was $10.35 billion, down 3.4% year-over-year. The top line surpassed the Zacks Consensus Estimate by 2%.

Segment details

Organic revenues were 4% lower in the reported quarter, while core organic revenues were down 3%.

Thermo Fisher operates in four business segments – Life Sciences Solutions, Analytical Instruments, Specialty Diagnostics and Laboratory Products, and Biopharmaceutical Services.

Revenues in the Life Sciences Solutions segment (22.1% of total revenues) declined 12.5% ​​year-over-year to $2.29 billion, while sales in the Analytical Instruments segment (16.3%) declined 2.1%. to $1.69 billion.

Revenues in the Laboratory Products and Biopharmaceutical Services segment (55.3%) declined 0.7% to $5.72 billion. The Specialty Diagnostics segment (10.7%) saw revenue increase 0.1% year-over-year to $1.11 billion.

Margin analysis

Gross margin of 41.6% in the first quarter increased 172 basis points (bps) year-over-year.

During the quarter, selling, general and administrative expenses increased 5.2% to $1.73 billion. Research and development expenses fell 4.3% to $331 million.

Adjusted operating margin for the quarter was 21.7%, an improvement of 38 basis points.

Financial position

The company ended the first quarter of 2024 with cash and cash equivalents of $5.49 billion, compared to $8.08 billion at the end of the fourth quarter of 2023.

Accumulated net cash from operations was $1.25 billion, compared to $729 million a year ago.

Thermo Fisher has consistently paid a dividend, with a five-year annual dividend growth rate of 16.39%.

Conductivity

Thermo Fisher raised its 2024 guidance.

The company now expects 2024 revenue to be between $42.3 billion and $43.3 billion (versus its previous guidance range of $42.1 billion to $43.3 billion). The Zacks Consensus Estimate for this stock is $42.73 billion.

The story continues

Adjusted EPS is forecast in the range of $21.14-$22.02 (previous estimate was $20.95-$22.00). The Zacks Consensus Estimate for this metric is $21.51 billion.

How have estimates changed since then?

Over the past month, investors have seen an upward trend in new estimates.

VGM results

Right now, Thermo Fisher has an average growth score of C, a rating with the same dynamic score. Following exactly the same trajectory, the stock is rated C for Value, ranking in the middle 20% for this investment strategy.

Overall, the stock has a Total VGM Score of C. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for this company generally show an upward trend, and the scale of these corrections looks promising. Notably, Thermo Fisher carries a Zacks Rank #3 (Hold). We expect a linear rate of return on the stock over the next few months.

Industry player performance

Thermo Fisher belongs to the Zacks Medical – Instruments industry. Another company in the same industry, Intuitive Surgical, Inc. (ISRG), has gained 6.8% over the past month. More than a month has passed since the company announced its results for the quarter ended March 2024.

In the most recent quarter, Intuitive Surgical reported revenue of $1.89 billion, representing a year-over-year change of +11.5%. EPS of $1.50 in the same period compared to $1.23 a year ago.

For the current quarter, Intuitive Surgical is expected to report earnings per share of $1.53, representing a change of +7.8% from the prior-year quarter. The Zacks Consensus Estimate has remained unchanged over the past 30 days.

The overall direction and magnitude of estimate revisions translates into a Zacks Rank #3 (Hold) in the Intuitive Surgery category. The stock also has a VGM Rating of F.

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