Thermo Fisher (TMO) Beats on Q2 Earnings, Raises 2024 EPS View
Thermo Fisher Scientific Inc.'s TMO second-quarter 2024 adjusted earnings per share (EPS) of $5.37 topped the Zacks Consensus Estimate by 4.9%. The figure also rose 4.3% year over year.
The adjusted number excludes certain non-recurring expenses, including asset amortization costs and certain restructuring costs.
GAAP EPS was $4.04, up 15.1% on a year-over-year basis.
Revenues in Detail
Revenues in the quarter totaled $10.54 billion, down 1.4% year over year. The top line, however, beat the Zacks Consensus Estimate by 0.3%.
Segment Details
Organic revenues in the reported quarter were 1% lower, while core organic revenues were flat year over year.
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 (22.3% of total revenues) declined 4.4% year over year to $2.36 billion, while Analytical Instruments Segment sales (16.9%) rose 1.9% to $1.78 billion. Our model projected revenues of $2.26 billion for the Life Sciences Solutions segment and $1.80 billion for the Analytical Instruments Segment.
Revenues in the Laboratory Products and Biopharma Services segment (54.6%) fell 1.3% to $5.76 billion. Our model projected revenues of $5.83 billion for the segment. The Specialty Diagnostics segment (10.6%) registered 0.7% year-over-year growth in revenues to $1.12 billion. This figure compares with our model’s projection of $1.06 billion for the second quarter.
Thermo Fisher Scientific Inc. Price, Consensus and EPS Surprise
Thermo Fisher Scientific Inc. price-consensus-eps-surprise-chart | Thermo Fisher Scientific Inc. Quote
Margin Analysis
Gross margin of 42.1% in the second quarter expanded 124 basis points (bps) year over year.
In the quarter, selling, general and administrative expenses rose 0.8% to $1.69 billion. Research and development expenses declined 1.7% to $339 million.
The adjusted operating margin in the quarter was 22.9%, reflecting an improvement of 90 bps.
Financial Position
The company ended second-quarter 2024 with cash and cash equivalents and short-term investments of $8.82 billion compared with $7.25 billion at the end of first-quarter 2024.
Cumulative net cash from operating activities at the end of the second quarter was $3.21 billion compared with $2.27 billion a year ago.
Thermo Fisher has a consistent dividend-paying history, with the five-year annualized dividend growth being 16.39%.
Guidance
Thermo Fisher updated its 2024 guidance.
The company raised its adjusted EPS guidance to a new range of $21.29 to $22.07 from its previous guidance of $21.14 to $22.02.
The company now expects 2024 revenues to be in the range of $42.4-$43.3 billion (tapered from the previous guided range of $42.3-$43.3 billion). The Zacks Consensus Estimate for 2024 revenues is pegged at $42.9 billion.
Our Take
Thermo Fisher exited the second quarter of 2024 with better-than-expected results. During the quarter, the company advanced its proven growth strategy by launching a range of high-impact, innovative new products. The newly-introduced analytical instruments products include the Thermo Scientific Stellar mass spectrometer and three new built-for-purpose editions of the Thermo Scientific Orbitrap Ascend Tribrid mass spectrometer tailored to MultiOmics, Structural Biology and BioPharma applications. The company is upbeat about the newly completed acquisition of Olink, a provider of differentiated next-generation proteomic solutions.
Margin expansion was an added upside. The company’s raised 2024 EPS outlook looks encouraging.
On the flip side, the company reported a decline in both reported and organic revenues in the second quarter. The year-over-year decline in Life Science Solutions and Laboratory Products and Biopharma Services revenues was also 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 Globus Medical GMED, Insulet PODD and Haemonetics HAE. While Globus Medical and Insulet sport a Zacks Rank #1 (Strong Buy) each, Haemonetics carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Globus Medical has an estimated earnings growth rate of 21.6% for 2024 compared with the industry’s 11.7%. GMED’s earnings surpassed estimates in each of the trailing four quarters, the average being 10.8%.
Insulet has an estimated long-term earnings growth rate of 17.9% compared with the industry’s 14.7%. PODD surpassed earnings estimates in each of the trailing four quarters, the average being 83%.
Haemonetics has an estimated fiscal 2025 earnings growth rate of 15.4% compared with the industry’s 12.5%. HAE surpassed earnings estimates in each of the trailing four quarters, the average being 13.2%.
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
Haemonetics Corporation (HAE) : Free Stock Analysis Report
Insulet Corporation (PODD) : Free Stock Analysis Report
Globus Medical, Inc. (GMED) : Free Stock Analysis Report