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Thermo Fisher (TMO) Strategic Buyouts Aid Amid Macro Issues
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Thermo Fisher (TMO - Free Report) has been gaining from strong end-market performances. International headwinds continue to hamper overall growth. The stock carries a Zacks Rank #3 (Hold) currently.
Thermo Fisher’s business strategy primarily includes expansion through strategic acquisition of technologies and businesses that augment the company’s existing products and services. As a result of these acquisitions, Thermo Fisher recorded significant goodwill and indefinite-lived intangible assets (primarily tradenames) on its balance sheet, which amounted to nearly $44.02 billion and $1.24 billion, respectively, as of Dec 31, 2023.
A few of its recent strategic acquisitions that are likely to drive future growth include its plan to acquire Olink Holdings for $26.00 per common share in cash, which was announced in October. The acquisition is expected to enhance Thermo Fisher’s capabilities in the high-growth proteomics market with the addition of highly differentiated solutions. Through the acquisition, the company expects to deliver $125 million in adjusted operating income synergies in the fifth year, driven by revenue synergies and cost efficiencies.
In August 2023, Thermo Fisher acquired CorEvitas. The buyout advanced Thermo Fisher’s clinical research capabilities with a leading regulatory-grade registry platform.
In June 2023, Thermo Fisher acquired MarqMetrix. The acquisition of MarqMetrix is an excellent strategic fit for Thermo Fisher as it adds the highly complementary Raman-based in-line PAT to Thermo Fisher’s portfolio.
Within the pharma and biotech end market, of late, Thermo Fisher’s biosciences and bioproduction businesses have significantly expanded their capacity to meet the global vaccine manufacturing requirements. Additionally, the pharma services business has been providing pharma and biotech customers with the services they need to develop and produce vaccines and therapies globally.
Within the pharma and biotech end market, the company delivered strong growth in its electron microscopy business as well as in the research and safety market channel. The company continues to witness improvements in the biotech funding environment and the stimulus program announced by China.
On the flip side, the challenging macroeconomic scenario and slower economic recovery in China continue to hurt Thermo Fisher's growth. The company has been witnessing headwinds in the government and academic markets. Moreover, many countries in Europe are also going through a tough time that might impact their academic budgets. Thermo Fisher remains cautious since growth could further moderate if the economic scenario worsens.
In the first quarter of 2024, North America declined in the mid-single digits, while Europe, Asia-Pacific and China declined in the low single digits. Our estimate suggests that the Asia Pacific region will decline 0.9%, while North America is expected to decline 0.5% in 2024.
Thermo Fisher's selling, general and administrative expenses rose 5.2% in the first quarter of 2024.
Further, as Thermo Fisher’s international sales grow, exposure to fluctuations in currency exchange rates will have a bigger effect on its financial results.
In 2023, currency translation had an unfavorable effect of $0.02 billion on revenues due to the strengthening of the U.S. dollar relative to other currencies in which the company sells products and services.
Hims & Hers Heath shares have surged 138.2% in the past year. Estimates for the company’s earnings have increased from 18 cents to 20 cents for 2024 and from 33 cents to 38 cents for 2025 in the past 30 days.
HIMS’ earnings beat estimates in three of the trailing four quarters and missed in one, delivering an average surprise of 79.2%. In the last reported quarter, it posted an earnings surprise of a staggering 150%.
Estimates for Medpace’s 2024 earnings per share have remained constant at $11.29 in the past 30 days. Shares of the company have surged 67.7% in the past year compared with the industry’s 4.4% growth.
MEDP’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 12.8%. In the last reported quarter, it delivered an earnings surprise of 30.6%.
Estimates for DexCom’s 2024 earnings per share have remained constant at $1.78 in the past 30 days. Shares of the company have plunged 15% in the past year against the industry’s 0.6% growth.
DXCM’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 34.1%. In the last reported quarter, it delivered an earnings surprise of 18.5%.
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Thermo Fisher (TMO) Strategic Buyouts Aid Amid Macro Issues
Thermo Fisher (TMO - Free Report) has been gaining from strong end-market performances. International headwinds continue to hamper overall growth. The stock carries a Zacks Rank #3 (Hold) currently.
Thermo Fisher’s business strategy primarily includes expansion through strategic acquisition of technologies and businesses that augment the company’s existing products and services. As a result of these acquisitions, Thermo Fisher recorded significant goodwill and indefinite-lived intangible assets (primarily tradenames) on its balance sheet, which amounted to nearly $44.02 billion and $1.24 billion, respectively, as of Dec 31, 2023.
A few of its recent strategic acquisitions that are likely to drive future growth include its plan to acquire Olink Holdings for $26.00 per common share in cash, which was announced in October. The acquisition is expected to enhance Thermo Fisher’s capabilities in the high-growth proteomics market with the addition of highly differentiated solutions. Through the acquisition, the company expects to deliver $125 million in adjusted operating income synergies in the fifth year, driven by revenue synergies and cost efficiencies.
In August 2023, Thermo Fisher acquired CorEvitas. The buyout advanced Thermo Fisher’s clinical research capabilities with a leading regulatory-grade registry platform.
In June 2023, Thermo Fisher acquired MarqMetrix. The acquisition of MarqMetrix is an excellent strategic fit for Thermo Fisher as it adds the highly complementary Raman-based in-line PAT to Thermo Fisher’s portfolio.
Thermo Fisher Scientific Inc. Price
Thermo Fisher Scientific Inc. price | Thermo Fisher Scientific Inc. Quote
Within the pharma and biotech end market, of late, Thermo Fisher’s biosciences and bioproduction businesses have significantly expanded their capacity to meet the global vaccine manufacturing requirements. Additionally, the pharma services business has been providing pharma and biotech customers with the services they need to develop and produce vaccines and therapies globally.
Within the pharma and biotech end market, the company delivered strong growth in its electron microscopy business as well as in the research and safety market channel. The company continues to witness improvements in the biotech funding environment and the stimulus program announced by China.
On the flip side, the challenging macroeconomic scenario and slower economic recovery in China continue to hurt Thermo Fisher's growth. The company has been witnessing headwinds in the government and academic markets. Moreover, many countries in Europe are also going through a tough time that might impact their academic budgets. Thermo Fisher remains cautious since growth could further moderate if the economic scenario worsens.
In the first quarter of 2024, North America declined in the mid-single digits, while Europe, Asia-Pacific and China declined in the low single digits. Our estimate suggests that the Asia Pacific region will decline 0.9%, while North America is expected to decline 0.5% in 2024.
Thermo Fisher's selling, general and administrative expenses rose 5.2% in the first quarter of 2024.
Further, as Thermo Fisher’s international sales grow, exposure to fluctuations in currency exchange rates will have a bigger effect on its financial results.
In 2023, currency translation had an unfavorable effect of $0.02 billion on revenues due to the strengthening of the U.S. dollar relative to other currencies in which the company sells products and services.
Key Picks
Some better-ranked stocks in the broader medical space are Hims & Hers Health (HIMS - Free Report) , Medpace (MEDP - Free Report) and DexCom (DXCM - Free Report) . While Hims & Hers Health and Medpace sport a Zacks Rank #1 (Strong Buy) each, Dexcom carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks Rank #1 stocks here.
Hims & Hers Heath shares have surged 138.2% in the past year. Estimates for the company’s earnings have increased from 18 cents to 20 cents for 2024 and from 33 cents to 38 cents for 2025 in the past 30 days.
HIMS’ earnings beat estimates in three of the trailing four quarters and missed in one, delivering an average surprise of 79.2%. In the last reported quarter, it posted an earnings surprise of a staggering 150%.
Estimates for Medpace’s 2024 earnings per share have remained constant at $11.29 in the past 30 days. Shares of the company have surged 67.7% in the past year compared with the industry’s 4.4% growth.
MEDP’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 12.8%. In the last reported quarter, it delivered an earnings surprise of 30.6%.
Estimates for DexCom’s 2024 earnings per share have remained constant at $1.78 in the past 30 days. Shares of the company have plunged 15% in the past year against the industry’s 0.6% growth.
DXCM’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 34.1%. In the last reported quarter, it delivered an earnings surprise of 18.5%.