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Thermo Fisher (TMO) Q1 Earnings Top Estimates, 2024 View Up

Thermo Fisher Scientific Inc.'s TMO first-quarter 2024 adjusted earnings per share (EPS) of $5.11 topped the Zacks Consensus Estimate by 8.7%. The figure also rose 1.6% year over year.

The adjusted number excludes certain non-recurring expenses, including asset amortization costs and certain restructuring costs.

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

Revenues in Detail

Revenues in the quarter totaled $10.35 billion, down 3.4% year over year. The top line surpassed the Zacks Consensus Estimate by 2%.

Segment Details

Organic revenues in the reported quarter were 4% lower, while Core organic revenues declined 3%.

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Thermo Fisher operates under four business segments — Life Sciences Solutions, Analytical Instruments, Specialty Diagnostics and Laboratory Products and Biopharma Services.

Revenues in the Life Sciences Solutions segment (22.1% of total revenues) declined 12.5% year over year to $2.29 billion, while Analytical Instruments Segment sales (16.3%) declined 2.1% to $1.69 billion. This figure compares with our model’s projection of $1.86 billion for the Life Sciences Solutions segment and $1.89 billion for the Analytical Instruments Segment for the first quarter.

Thermo Fisher Scientific Inc. Price, Consensus and EPS Surprise

 

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

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

 

Revenues in the Laboratory Products and Biopharma Services segment (55.3%) fell 0.7% to $5.72 billion. This figure compares with our model’s projection of $5.86 billion for the first quarter. The Specialty Diagnostics segment (10.7%) registered a 0.1% year-over-year growth in revenues to $1.11 billion. This figure compares with our model’s projection of $991 million for the first quarter.

Margin Analysis

The gross margin of 41.6% in the first quarter expanded 172 basis points (bps) year over year.

In the quarter, selling, general and administrative expenses rose 5.2% to $1.73 billion. Research and development expenses declined 4.3% to $331 million.

The adjusted operating margin in the quarter came in at 21.7%, reflecting an improvement of 38 bps.

Financial Position

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

Cumulative net cash from operating activities was $1.25 billion compared with $729 million a year ago.

Thermo Fisher has a consistent dividend-paying history, with the five-year annualized dividend growth being 16.39%.

Guidance

Thermo Fisher raised its 2024 guidance.

The company now expects 2024 revenues to be in the range of $42.3-$43.3 billion (up from previous guided range of $42.1-$43.3 billion). The Zacks Consensus Estimate for the same is pegged at $42.73 billion.

The adjusted EPS is projected in the band of $21.14-$22.02 (the previous guidance was $20.95-$22.00). The Zacks Consensus Estimate for the metric is pegged at $21.51 billion.

Our Take

Thermo Fisher exited the first quarter of 2024 with better-than-expected results. During the quarter, the company advanced its proven growth strategy, launching a range of high-impact, innovative new products. Thermo Fisher also launched the new Axiom PangenomiX Array — a high-throughput array for use in human genomic studies across global populations, including disease risk and detection research and population-scale disease research programs. The company continues to strengthen its industry-leading commercial engine and deepen its trusted partner status with customers to accelerate innovation and enhance productivity to improve patient care. The company raised its 2024 outlook, which also looks encouraging.

However, the year-over-year decline in revenues in Life Science Solutions and Laboratory Products and Biopharma Services looks disappointing.

Zacks Rank and Key Picks

Thermo Fisher currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader medical space are Inspire Medical Systems INSP, ICU Medical ICUI and Exact Sciences EXAS.

Inspire Medical Systems, sporting a Zacks Rank #1 (Strong Buy), reported a fourth-quarter 2023 EPS of 49 cents, beating the Zacks Consensus Estimate of a loss of 4 cents. Revenues of $192.5 million topped the consensus estimate by 0.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Inspire Medical Systems has an estimated earnings growth rate of 51.4% in 2024 compared with the industry’s 19.4%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 353.6%.

ICU Medical, carrying a Zacks Rank #1, reported a fourth-quarter 2023 adjusted EPS of $1.57, which surpassed the Zacks Consensus Estimate by 33.1%. Revenues of $587.9 million outpaced the Zacks Consensus Estimate by 4.1%.

ICUI has an estimated next-year earnings growth rate of 43.9% compared with the industry’s 25.3%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 25.54%.

Exact Sciences, carrying a Zacks Rank #2, reported a fourth-quarter 2024 loss of 27 cents per share, narrower than the Zacks Consensus Estimate of a loss of 53 cents. Revenues of $646.9 million topped the Zacks Consensus Estimate by 2.4%.

EXAS has an estimated earnings growth rate of 23.9% in 2024 compared with the industry’s 13% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 51.5%.

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