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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) is likely to gain in the coming quarters, backed by a slew of impressive product introductions across the portfolio. Promising developments within the company’s growth strategy, consisting of developing high-impact, innovative new products, leveraging scale and high growth in emerging markets and delivering a unique value proposition to customers, are encouraging. Stable solvency is an added upside.
However, macroeconomic headwinds and competitive pressures may pose challenges to TMO’s results of operations.
In the past year, this Zacks Rank #3 (Hold) stock has decreased 6.3% against the 1.2% rise of the industry and a 22.5% increase of the S&P 500 composite.
The renowned medical and laboratory equipment provider has a market capitalization of $210.31 billion. TMO has an earnings yield of 4.00% against the industry’s -5.04%. The company’s earnings surpassed estimates in three of the trailing four quarters and missed in one, delivering an average surprise of 0.6%.
Let’s delve deeper.
Upsides
Promising Growth Strategy: In terms of innovations, Thermo Fisher’s latest launch of several high-impact new products across businesses looks encouraging. The Thermo Scientific Astral is witnessing strong demand from customers for their protein discovery research. In the third quarter, the company launched the EXENT Solution in Europe after receiving IVDR certification.
Image Source: Zacks Investment Research
The unique relationship of trusted partner status that TMO has built with its customers gives the company an early insight into customers' unmet needs. It brings industry-leading products, services and expertise together in ways that no one else can. The company expanded its site in St. Louis, MO, which features the new Thermo Scientific high-performer DynaDrive 5,000-liter single-use bioreactor.
Further, Thermo Fisher continues to enhance its customer value proposition by strengthening the capabilities to enable customers to make the world healthier, cleaner and safer. In lieu of this, it also further strengthened its clinical research offering by opening a facility in Ohio to produce sample collection kits for clinical trials.
Impressive Product Launch: Earlier in September 2023, TMO launched the next-generation platform Gibco CTS Detachable Dynabeads. The platform comes with the first-of-its-kind active release mechanism for clinical trials and commercial manufacturing use. A month before that, the company introduced the Applied Biosystems CytoScan HD Accel array — a new chromosomal microarray intended to enhance cytogenetic research lab productivity, efficiency and profitability with an industry-leading two-day turnaround time.
In July 2023, Thermo Fisher launched two new next-generation sequencing-based options to support preimplantation genetic testing-aneuploidy used commonly to inform in vitro fertilization and intracytoplasmic sperm injection research. During the same month, Thermo Fisher introduced Diomni Enterprise Software, helping streamline routine diagnostics testing for standardization and faster time-to-results.
Stable Solvency: Thermo Fisher ended the third quarter of 2023 with no debt on its balance sheet, which looks promising. The company had cash and cash equivalents of $6.15 billion in the third quarter compared with $8.42 billion at the end of the second quarter of 2023. The current dividend payout ratio is 6.3%, unchanged from the second quarter.
Downsides
Macroeconomic Challenges Continue to Weigh on the Stock: The challenging macroeconomic scenario and slower economic recovery in China continue to hurt Thermo Fisher's growth. During the third quarter of 2023, Thermo Fisher registered a year-over-year decline in sales in North America and Asia Pacific. Further, China declined in the high single-digits. The company has been witnessing headwinds in the government and academic markets.
Tough Competitive Pressure: For its diversified portfolio, Thermo Fisher faces different types of competitors, including a broad range of manufacturers and third-party distributors. The competitive landscape is quite tough with changing technology and customer demands that require continuing research and development.
Estimate Trend
The Zacks Consensus Estimate for the company’s 2023 earnings per share (EPS) has remained constant at $21.52 in the past 30 days.
The Zacks Consensus Estimate for TMO’s 2023 revenues is pegged at $42.71 billion. This suggests a 4.9% drop from the year-ago reported number.
Haemonetics has an estimated earnings growth rate of 28.4% for fiscal 2024 compared with the industry’s 15.3%. HAE’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 16.1%. Its shares have decreased 4.6% against the industry’s 5.0% rise in the past year.
DaVita, sporting a Zacks Rank #1 at present, has a long-term estimated earnings growth rate of 17.3% compared with the industry’s 11.3%. Shares of the company have increased 32% compared with the industry’s 9.4% rise over the past year.
DVA’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.6%. In the last reported quarter, it delivered an average earnings surprise of 48.4%.
HealthEquity, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 27.5% compared with the industry’s 13.9%. Shares of HQY have increased 24.8% against the industry’s 3.7% decline over the past year.
HQY’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 16.5%. In the last reported quarter, it delivered an average earnings surprise of 22.5%.
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Here's Why Investors Should Retain Thermo Fisher (TMO) Stock
Thermo Fisher Scientific Inc. (TMO - Free Report) is likely to gain in the coming quarters, backed by a slew of impressive product introductions across the portfolio. Promising developments within the company’s growth strategy, consisting of developing high-impact, innovative new products, leveraging scale and high growth in emerging markets and delivering a unique value proposition to customers, are encouraging. Stable solvency is an added upside.
However, macroeconomic headwinds and competitive pressures may pose challenges to TMO’s results of operations.
In the past year, this Zacks Rank #3 (Hold) stock has decreased 6.3% against the 1.2% rise of the industry and a 22.5% increase of the S&P 500 composite.
The renowned medical and laboratory equipment provider has a market capitalization of $210.31 billion. TMO has an earnings yield of 4.00% against the industry’s -5.04%. The company’s earnings surpassed estimates in three of the trailing four quarters and missed in one, delivering an average surprise of 0.6%.
Let’s delve deeper.
Upsides
Promising Growth Strategy: In terms of innovations, Thermo Fisher’s latest launch of several high-impact new products across businesses looks encouraging. The Thermo Scientific Astral is witnessing strong demand from customers for their protein discovery research. In the third quarter, the company launched the EXENT Solution in Europe after receiving IVDR certification.
Image Source: Zacks Investment Research
The unique relationship of trusted partner status that TMO has built with its customers gives the company an early insight into customers' unmet needs. It brings industry-leading products, services and expertise together in ways that no one else can. The company expanded its site in St. Louis, MO, which features the new Thermo Scientific high-performer DynaDrive 5,000-liter single-use bioreactor.
Further, Thermo Fisher continues to enhance its customer value proposition by strengthening the capabilities to enable customers to make the world healthier, cleaner and safer. In lieu of this, it also further strengthened its clinical research offering by opening a facility in Ohio to produce sample collection kits for clinical trials.
Impressive Product Launch: Earlier in September 2023, TMO launched the next-generation platform Gibco CTS Detachable Dynabeads. The platform comes with the first-of-its-kind active release mechanism for clinical trials and commercial manufacturing use. A month before that, the company introduced the Applied Biosystems CytoScan HD Accel array — a new chromosomal microarray intended to enhance cytogenetic research lab productivity, efficiency and profitability with an industry-leading two-day turnaround time.
In July 2023, Thermo Fisher launched two new next-generation sequencing-based options to support preimplantation genetic testing-aneuploidy used commonly to inform in vitro fertilization and intracytoplasmic sperm injection research. During the same month, Thermo Fisher introduced Diomni Enterprise Software, helping streamline routine diagnostics testing for standardization and faster time-to-results.
Stable Solvency: Thermo Fisher ended the third quarter of 2023 with no debt on its balance sheet, which looks promising. The company had cash and cash equivalents of $6.15 billion in the third quarter compared with $8.42 billion at the end of the second quarter of 2023. The current dividend payout ratio is 6.3%, unchanged from the second quarter.
Downsides
Macroeconomic Challenges Continue to Weigh on the Stock: The challenging macroeconomic scenario and slower economic recovery in China continue to hurt Thermo Fisher's growth. During the third quarter of 2023, Thermo Fisher registered a year-over-year decline in sales in North America and Asia Pacific. Further, China declined in the high single-digits. The company has been witnessing headwinds in the government and academic markets.
Tough Competitive Pressure: For its diversified portfolio, Thermo Fisher faces different types of competitors, including a broad range of manufacturers and third-party distributors. The competitive landscape is quite tough with changing technology and customer demands that require continuing research and development.
Estimate Trend
The Zacks Consensus Estimate for the company’s 2023 earnings per share (EPS) has remained constant at $21.52 in the past 30 days.
The Zacks Consensus Estimate for TMO’s 2023 revenues is pegged at $42.71 billion. This suggests a 4.9% drop from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Haemonetics (HAE - Free Report) , DaVita (DVA - Free Report) and HealthEquity (HQY - Free Report) .
Haemonetics has an estimated earnings growth rate of 28.4% for fiscal 2024 compared with the industry’s 15.3%. HAE’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 16.1%. Its shares have decreased 4.6% against the industry’s 5.0% rise in the past year.
HAE carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DaVita, sporting a Zacks Rank #1 at present, has a long-term estimated earnings growth rate of 17.3% compared with the industry’s 11.3%. Shares of the company have increased 32% compared with the industry’s 9.4% rise over the past year.
DVA’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.6%. In the last reported quarter, it delivered an average earnings surprise of 48.4%.
HealthEquity, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 27.5% compared with the industry’s 13.9%. Shares of HQY have increased 24.8% against the industry’s 3.7% decline over the past year.
HQY’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 16.5%. In the last reported quarter, it delivered an average earnings surprise of 22.5%.