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Why Is Thermo Fisher (TMO) Up 3.6% Since Last Earnings Report?
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A month has gone by since the last earnings report for Thermo Fisher Scientific (TMO - Free Report) . Shares have added about 3.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Thermo Fisher due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Thermo Fisher Beats on Q2 Earnings on Growth In All Lines
Thermo Fisher second-quarter 2021 adjusted earnings per share of $5.60 beat the Zacks Consensus Estimate by 1.6%. The figure surged 43.9% year over year. The adjusted number excludes certain non-recurring expenses including asset amortization and restructuring costs.
GAAP earnings per share were $4.61, a 58.9% surge on a year-over-year basis.
The company’s organic growth in base business along with COVID-19 led initiatives to scale up vaccine production contributed to a strong bottom-line performance.
Revenues in the quarter under review grossed $9.27 billion, up 34% year over year. The top line exceeded the Zacks Consensus Estimate by 5.9%.
Quarter in Detail
Organic revenues in the reported quarter grew 28% year over year. While acquisitions contributed 2% to the top line, favorable currency translation increased revenues by 5%. Organic revenue growth from the base business was 27% in the reported quarter.
Thermo Fisher operates under four business segments: Life Sciences Solutions, Analytical Instruments, Specialty Diagnostics, and Laboratory Products and Services.
Revenues at the Life Sciences Solutions segment (38.4% of total revenues) improved 37% year over year to $3.56 billion while Analytical Instruments Segment sales (16%) rose 41% to $1.48 billion.
Revenues at the Laboratory Products and Services segment (38.6%) rose 29% to $3.58 billion. The Specialty Diagnostics segment (13.3%) recorded 25% year-over-year rise in revenues to $1.24 billion.
Gross margin of 50.6% in the second quarter contracted 6 basis points (bps) year over year on 34.2% rise in cost of revenues. In the quarter, selling, general and administrative expenses increased 13.9% to $1.61 billion. Research and development expenses were $343 million, up 29.9% year over year. Adjusted operating margin for the quarter came in at 29.5%, reflecting an expansion of 315 bps.
The company exited the second quarter with cash and cash equivalents of $7.02 billion compared with $5.58 billion at the end of the first quarter. Cumulative net cash provided by operating activities at the end of the second quarter was $4.21 billion compared with $2.24 billion a year ago.
Guidance
The company has raised its revenue guidance for 2021 to $35.90 billion, indicating 11% reported growth over 2020 (earlier guidance was $35.6 billion, implying 10% reported growth expectation). Full-year adjusted earnings per share guidance has been raised to $22.07, indicating 13% growth over 2020 (previous guidance was $21.97, representing 12% year over year growth). The current Zacks Consensus Estimate for adjusted earnings and revenues is pegged at $22.01 and $35.60 billion, respectively.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Thermo Fisher has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Thermo Fisher has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Thermo Fisher (TMO) Up 3.6% Since Last Earnings Report?
A month has gone by since the last earnings report for Thermo Fisher Scientific (TMO - Free Report) . Shares have added about 3.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Thermo Fisher due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Thermo Fisher Beats on Q2 Earnings on Growth In All Lines
Thermo Fisher second-quarter 2021 adjusted earnings per share of $5.60 beat the Zacks Consensus Estimate by 1.6%. The figure surged 43.9% year over year. The adjusted number excludes certain non-recurring expenses including asset amortization and restructuring costs.
GAAP earnings per share were $4.61, a 58.9% surge on a year-over-year basis.
The company’s organic growth in base business along with COVID-19 led initiatives to scale up vaccine production contributed to a strong bottom-line performance.
Revenues in the quarter under review grossed $9.27 billion, up 34% year over year. The top line exceeded the Zacks Consensus Estimate by 5.9%.
Quarter in Detail
Organic revenues in the reported quarter grew 28% year over year. While acquisitions contributed 2% to the top line, favorable currency translation increased revenues by 5%. Organic revenue growth from the base business was 27% in the reported quarter.
Thermo Fisher operates under four business segments: Life Sciences Solutions, Analytical Instruments, Specialty Diagnostics, and Laboratory Products and Services.
Revenues at the Life Sciences Solutions segment (38.4% of total revenues) improved 37% year over year to $3.56 billion while Analytical Instruments Segment sales (16%) rose 41% to $1.48 billion.
Revenues at the Laboratory Products and Services segment (38.6%) rose 29% to $3.58 billion. The Specialty Diagnostics segment (13.3%) recorded 25% year-over-year rise in revenues to $1.24 billion.
Gross margin of 50.6% in the second quarter contracted 6 basis points (bps) year over year on 34.2% rise in cost of revenues. In the quarter, selling, general and administrative expenses increased 13.9% to $1.61 billion. Research and development expenses were $343 million, up 29.9% year over year. Adjusted operating margin for the quarter came in at 29.5%, reflecting an expansion of 315 bps.
The company exited the second quarter with cash and cash equivalents of $7.02 billion compared with $5.58 billion at the end of the first quarter. Cumulative net cash provided by operating activities at the end of the second quarter was $4.21 billion compared with $2.24 billion a year ago.
Guidance
The company has raised its revenue guidance for 2021 to $35.90 billion, indicating 11% reported growth over 2020 (earlier guidance was $35.6 billion, implying 10% reported growth expectation). Full-year adjusted earnings per share guidance has been raised to $22.07, indicating 13% growth over 2020 (previous guidance was $21.97, representing 12% year over year growth). The current Zacks Consensus Estimate for adjusted earnings and revenues is pegged at $22.01 and $35.60 billion, respectively.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Thermo Fisher has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Thermo Fisher has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.