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Here's Why Investors Should Retain Thermo Fisher (TMO) Stock
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Thermo Fisher Scientific Inc. (TMO - Free Report) has been gaining from continued strength across its certain end markets. Its strong results in the high-growth and emerging markets seem impressive. Yet, a weak solvency scenario and persistent foreign exchange headwinds raise apprehension.
In the past year, this Zacks Rank #3 (Hold) stock has lost 17.5% compared with a 29.7% fall of the industry and a 21.2% decline of the S&P 500 composite.
This renowned medical and laboratory equipment provider has a market capitalization of $212.05 billion. Its earnings surpassed estimates in the trailing four quarters, the average surprise being 15.27%.
The company’s long-term expected growth rate of 12.5% for earnings compares with the industry’s long-term growth expectation of 16.2%.
Let’s delve deeper.
Factors at Play
Q3 Upsides: Thermo Fisher exited the third quarter with better-than-expected results on 14% core organic revenue growth (considering the impact of PPD revenues and excluding the impacts of COVID-19 testing revenue). Organically, North America rose in the low-single digits, Asia Pacific moved up in the low-single digits and China grew in the high-single digits in Q3. Revenues in the Analytical Instruments Segment and the Laboratory Products and Biopharma Services segment showed strong year-over-year growth.
Strength in End Markets: In third-quarter 2022, Thermo Fisher witnessed strength in three of its four end markets, categorized by customer type or geography. Within the pharma and biotech end market, the company delivered growth in the mid-teens on growth across all businesses serving these customers, highlighted by the bioproduction and pharma services businesses. In academics and government, Thermo Fisher rose in the mid-single digits, with good growth in biosciences and electron microscopy. Within industrial and applied, Thermo Fisher grew in the high teens during the quarter on broad-based growth in all of its analytical instrument businesses, including electron microscopy, chromatography and mass spectrometry.
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Focus on International Markets: Thermo Fisher boasts strong international operations and has witnessed consistent growth in the high-growth and emerging markets. In the third quarter of 2022, Asia Pacific grew in the low-single digits and China rose in the high-single digits.
Downsides
Weak Solvency: Thermo Fisher is well-capitalized and exited the third quarter of 2022 with cash and cash equivalents of $2.92 billion compared with $1.89 billion at the end of the second quarter. The company finished the third quarter with approximately $29.2 billion of total debt, compared to $30.2 billion at the end of the second quarter.
Forex Woes: Thermo Fisher derives more than 50% of its revenues from the international market, which exposes it to fluctuations in foreign currency. In the past years, the company’s earnings were affected significantly by headwinds from foreign exchange.
Tough Competitive Pressure: On account of its diversified portfolio, Thermo Fisher faces different types of competitors, including a broad range of manufacturers and third-party distributors. The competitive landscape is tough with changing technology and customer demands that require continuous research and development.
Estimate Trend
Thermo Fisher has been witnessing a positive estimate revision trend for 2022. In the past 60 days, the Zacks Consensus Estimate for Thermo Fisher’s 2022 earnings has moved 0.4% north to $23.04.
The Zacks Consensus Estimate for its 2022 revenues is pegged at $43.82 billion, suggesting a 11.8% rise from the 2021 reported figure.
Key Picks
Some better-ranked stocks in the broader medical space that investors can consider are ShockWave Medical, Inc. , Orthofix Medical Inc. (OFIX - Free Report) and Merit Medical System (MMSI - Free Report) .
ShockWave Medical, sporting a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 33.1% for 2023. The company’s earnings surpassed estimates in all the trailing four quarters, the average beat being 180.1%.
ShockWave Medical has outperformed its industry in the past year. SWAV has gained 35% against the industry’s 32.6% fall in the past year.
Orthofix Medical, currently sporting a Zacks Rank #1 (Strong Buy), reported third-quarter 2022 adjusted EPS of 13 cents, which beat the Zacks Consensus Estimate by a stupendous 550%. Revenues of $114 million outpaced the consensus mark by 2.7%.
Orthofix Medical has an estimated next-year growth rate of 58.97%. MMSI’s earnings surpassed estimates in the trailing three quarters and missed in one, the average being 129.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Merit Medical, currently carrying a Zacks Rank of 2, reported third-quarter 2022 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 20.8%. Revenues of $287.2 million outpaced the consensus mark by 5.2%.
Merit Medical has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average being 25.4%.
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Here's Why Investors Should Retain Thermo Fisher (TMO) Stock
Thermo Fisher Scientific Inc. (TMO - Free Report) has been gaining from continued strength across its certain end markets. Its strong results in the high-growth and emerging markets seem impressive. Yet, a weak solvency scenario and persistent foreign exchange headwinds raise apprehension.
In the past year, this Zacks Rank #3 (Hold) stock has lost 17.5% compared with a 29.7% fall of the industry and a 21.2% decline of the S&P 500 composite.
This renowned medical and laboratory equipment provider has a market capitalization of $212.05 billion. Its earnings surpassed estimates in the trailing four quarters, the average surprise being 15.27%.
The company’s long-term expected growth rate of 12.5% for earnings compares with the industry’s long-term growth expectation of 16.2%.
Let’s delve deeper.
Factors at Play
Q3 Upsides: Thermo Fisher exited the third quarter with better-than-expected results on 14% core organic revenue growth (considering the impact of PPD revenues and excluding the impacts of COVID-19 testing revenue). Organically, North America rose in the low-single digits, Asia Pacific moved up in the low-single digits and China grew in the high-single digits in Q3. Revenues in the Analytical Instruments Segment and the Laboratory Products and Biopharma Services segment showed strong year-over-year growth.
Strength in End Markets: In third-quarter 2022, Thermo Fisher witnessed strength in three of its four end markets, categorized by customer type or geography. Within the pharma and biotech end market, the company delivered growth in the mid-teens on growth across all businesses serving these customers, highlighted by the bioproduction and pharma services businesses. In academics and government, Thermo Fisher rose in the mid-single digits, with good growth in biosciences and electron microscopy. Within industrial and applied, Thermo Fisher grew in the high teens during the quarter on broad-based growth in all of its analytical instrument businesses, including electron microscopy, chromatography and mass spectrometry.
Focus on International Markets: Thermo Fisher boasts strong international operations and has witnessed consistent growth in the high-growth and emerging markets. In the third quarter of 2022, Asia Pacific grew in the low-single digits and China rose in the high-single digits.
Downsides
Weak Solvency: Thermo Fisher is well-capitalized and exited the third quarter of 2022 with cash and cash equivalents of $2.92 billion compared with $1.89 billion at the end of the second quarter. The company finished the third quarter with approximately $29.2 billion of total debt, compared to $30.2 billion at the end of the second quarter.
Forex Woes: Thermo Fisher derives more than 50% of its revenues from the international market, which exposes it to fluctuations in foreign currency. In the past years, the company’s earnings were affected significantly by headwinds from foreign exchange.
Tough Competitive Pressure: On account of its diversified portfolio, Thermo Fisher faces different types of competitors, including a broad range of manufacturers and third-party distributors. The competitive landscape is tough with changing technology and customer demands that require continuous research and development.
Estimate Trend
Thermo Fisher has been witnessing a positive estimate revision trend for 2022. In the past 60 days, the Zacks Consensus Estimate for Thermo Fisher’s 2022 earnings has moved 0.4% north to $23.04.
The Zacks Consensus Estimate for its 2022 revenues is pegged at $43.82 billion, suggesting a 11.8% rise from the 2021 reported figure.
Key Picks
Some better-ranked stocks in the broader medical space that investors can consider are ShockWave Medical, Inc. , Orthofix Medical Inc. (OFIX - Free Report) and Merit Medical System (MMSI - Free Report) .
ShockWave Medical, sporting a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 33.1% for 2023. The company’s earnings surpassed estimates in all the trailing four quarters, the average beat being 180.1%.
ShockWave Medical has outperformed its industry in the past year. SWAV has gained 35% against the industry’s 32.6% fall in the past year.
Orthofix Medical, currently sporting a Zacks Rank #1 (Strong Buy), reported third-quarter 2022 adjusted EPS of 13 cents, which beat the Zacks Consensus Estimate by a stupendous 550%. Revenues of $114 million outpaced the consensus mark by 2.7%.
Orthofix Medical has an estimated next-year growth rate of 58.97%. MMSI’s earnings surpassed estimates in the trailing three quarters and missed in one, the average being 129.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Merit Medical, currently carrying a Zacks Rank of 2, reported third-quarter 2022 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 20.8%. Revenues of $287.2 million outpaced the consensus mark by 5.2%.
Merit Medical has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average being 25.4%.