What's in Store for Thermo Fisher (TMO) in Q4 Earnings?
Thermo Fisher Scientific Inc. TMO is slated to release fourth-quarter 2022 results on Feb 1, 2023 before market open.
In the last reported quarter, Thermo Fisher’s earnings of $5.08 per share exceeded the Zacks Consensus Estimate by 6.28%. Its earnings surpassed estimates in each of the trailing four quarters, the average surprise being 15.27%.
Let's discuss the factors that are likely to get reflected in the upcoming results.
Factors at Play
Through the months of the fourth quarter, Thermo Fisher’s Analytical Instruments segment is expected to have generated strong sales, banking on electron microscopy, chromatography, mass spectrometry, chemical analysis as well as research and safety market channel businesses.
The company is expected to have recorded growth, driven by a favorable business mix and new launches. The company advanced its Orbitrap portfolio, launching the Orbitrap Ascend Tribrid mass spectrometer. In electron microscopy, the company introduced the Thermo Scientific Arctis Cryo-Plasma Focused Ion Beam, an automated microscope that streamlines cryoelectron tomography. These are all expected to have contributed to the Q4 top line of Thermo Fisher.
However, the industrywide trend of record-level inflation, supply issues and staffing shortages are expected to have deterred growth in several areas within this business.
Thermo Fisher Scientific Inc. Price and EPS Surprise
Thermo Fisher Scientific Inc. price-eps-surprise | Thermo Fisher Scientific Inc. Quote
Within the Life-Science Solutions segment, the company is expected to have registered growth in its bioproduction business, banking on progress with cell culture media, single-use technologies and a rapidly growing purification resins business as well as pharma services business.
Further, in terms of performance in high-growth and emerging markets, the company has made major investments in bioproduction of late. It has opened a second facility in Utah and a new facility in Tennessee, both of which are operational now. It has also expanded its Grand Island, New York cell culture media facility and opened a purification facility in Massachusetts. These developments are expected to have contributed to the company’s revenues in Q4.
However, this might have been offset by lower revenues in the genetic sciences business due to a moderation in COVID testing revenues compared to the year-ago period.
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. Looking at the consistently growing resurgence of virus-led healthcare needs, the Microbiology, Healthcare Market Channel and Clinical Diagnostics businesses are expected to have witnessed growth in Q4. More specifically, the company’s strong underlying growth in the healthcare market channel, transplant diagnostics and clinical diagnostics businesses is expected to have contributed to the to-be-reported quarter’s top line. However, this might have been offset by lower COVID-19 testing revenues and the ongoing macroeconomic headwinds.
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. Also, the PPD business in the research and safety market channel as well as plastics used in testing workflows and cold storage equipment manufactured by the lab products business are expected to have generated strong sales growth in the fourth quarter.
The Zacks Consensus Estimate for total revenues of $10.36 billion for the fourth quarter suggests a 3.2% decline from the prior-year quarter’s reported figure. The consensus mark for earnings of $5.19 per share indicates a 20.6% decline from the year-ago quarter’s reported figure.
What Our Quantitative Model Predicts
Per our proven model, stocks with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) have a good chance of beating estimates. This is not the case as you can see:
Earnings ESP: Thermo Fisher has an Earnings ESP of -0.62%. 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.
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.
Cardinal Health CAH has an Earnings ESP of +5.75% and a Zacks Rank of #2. The company will release fourth-quarter 2022 results on Feb 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cardinal Health has a long-term expected earnings growth rate of 11.7%. Cardinal Health’s earnings yield of 6.87% compares favorably with the industry’s 4.34%.
Hologic HOLX has an Earnings ESP of +3.13% and a Zacks Rank of #2. Hologic is scheduled to release first-quarter fiscal 2023 results on Feb 1.
Hologic’s long-term historical earnings growth rate is estimated at 23.4%. Hologic’s earnings yield of 4.35% compares favorably with the industry’s -6.74%.
Laboratory Corporation of America Holdings or LabCorp LH currently has an Earnings ESP of +2.67% and a Zacks Rank of #2. LabCorp is scheduled to release fourth-quarter 2022 results on Feb 16.
LabCorp’s long-term historical earnings growth rate is estimated at 26.1%. LabCorp’s earnings yield of 7.02% compares favorably with the industry’s 4.34%.
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