U.S. Markets open in 4 hrs 2 mins

Will Overall Growth Aid Thermo Fisher's (TMO) Q4 Earnings?

Zacks Equity Research

Thermo Fisher Scientific Inc. TMO is slated to report fourth-quarter 2018 results, before the market opens on Jan 30. In the last reported quarter, the company delivered a positive earnings surprise of 2.75%. Moreover, its key metrics surpassed estimates in all the trailing four reported quarters, the average being 3.88%.

Let's see how things are shaping up for this announcement.

Key Catalysts

Thermo Fisher has been going strong with its analytical instrument business, boasting higher global demand. The company is witnessing balanced growth across all its businesses within this segment, particularly in chemical analysis, chromatography mass spectrometry and electron microscopy. Its acquisition of FEI has been largely contributing to its analytical instruments portfolio over the past year. Ever since, the company has introduced several products, which leverage its leading instrument platforms and digital capabilities.

Further, we are optimistic about a favorable NIH (National Institutes of Health) funding scenario. Per Thermo Fisher, NIH funds are flowing well and we are specifically upbeat about NIH's announcement in May to allocate $130 million to researchwork based on cryo-electron microscopy, which bodes well for spurring future demand. This is also a vital highlight of the company’s analytical instrument performance.

Thermo Fisher Scientific Inc. Price and EPS Surprise

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

Thermo Fisher is also progressing well with respect to its next-generation sequencing (NGS) business. Its recently-introduced Ion GeneStudio S5 Series of instruments offers a full solution to help researchers invent cancer diagnostics for clinical treatments. This development is likely to aid the company’s top line in the yet-to-be-reported quarter.

Overall, this Waltham MA-based company is gearing up for a yet another quarter of strong growth in analytical instruments segment. In the period to be reported, Thermo Fisher expects to see a positive impact from the electron microscopy business and a robust volume expansion plus productivity.

The Zacks Consensus Estimate for Analytical Instruments revenues is pegged at $1.46 billion, up 2.9% from the year-ago figure.

Here are other factors that might influence Thermo Fisher’s fourth-quarter results:

The company’s focus on boosting growth through implementation of strategies and consolidating its product offerings is encouraging. These initiatives might in turn, help it post impressive results during the fourth quarter.

It spent nearly $1 billion on research and development in 2017 and the same trend sustained through 2018. Alike the last reported quarter, we expect all innovations and product introductions to substantially drive the company’s top line in the quarter to be reported.

The company’s aim at expanding capabilities across the fast-growing Asia-Pacific belt as well as the emerging markets should also firmly enhance its results. Recent standout contributors are China, India and South Korea. With strategic investments in supporting key customer applications, Thermo Fisher forecasts to retain a favorable momentum for 2018.

Moreover, growth is estimated in the applied markets such as environmental and food safeties apart from life science. In addition, the company is betting on some key areas with enormous opportunities at its disposal including advancing precision medicines from mass spectrometry to the targeted gene sequencing and structural biology. 

However, we are anxious about Thermo Fisher facing a foreign exchange headwind pertaining to 2018 revenues and adjusted EPS. Also, a hostile macroeconomic condition persists to weigh heavily on the stock. Plus, stiff competition continues to pose challenges to the stock’s value.

Here’s What the Quantitative Model Predicts:

Our proven Zacks model clearly shows that a company with a solid Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has good chances of beating estimates if it also has a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Thermo Fisher has a Zacks Rank #3, which increases the predictive power of ESP. It also has an Earnings ESP of +0.73%, together which a likely earnings surprise is indicated.

Other Stocks Worth a Look

Here are a few other medical stocks worth considering from the same space as these too comprise the right mix of elements to exceed expectations this reporting cycle.

Chimerix, Inc. CMRX has an Earnings ESP of +13.89% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here.

MacroGenics, Inc. MGNX has an Earnings ESP of +24.79% and a Zacks Rank of 2.

NanoString Technologies, Inc. NSTG has an Earnings ESP of +4.64% and a Zacks Rank of 1.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.

Click here for the 6 trades >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Thermo Fisher Scientific Inc. (TMO) : Free Stock Analysis Report
 
Chimerix, Inc. (CMRX) : Free Stock Analysis Report
 
NanoString Technologies, Inc. (NSTG) : Free Stock Analysis Report
 
MacroGenics, Inc. (MGNX) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research