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TMO Stock Gains From Innovation Amid Macroeconomic Issues
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Strong electron microscopy growth and strategic buyouts are likely to drive Thermo Fisher Scientific’s (TMO - Free Report) growth. Yet, macroeconomic issues and currency fluctuations continue to dampen business growth. The stock carries a Zacks Rank #3 (Hold) currently.
Factors Driving Growth for TMO Stock
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. The pharma services business has been providing pharma and biotech customers with the services they need to develop and produce vaccines and therapies globally. In terms of the latest update, within this end market, biosciences and clinical research businesses are contributing to growth.
Within “academic and government” as well as in “industrial and applied” end markets, the company delivered strong growth in its electron microscopy business, driven by significant product launches. In the diagnostics and healthcare end market, despite the runoff of COVID-19 testing-related revenues, the company reported core revenue growth, highlighted by transplant diagnostic and immunodiagnostics businesses, as well as the healthcare market channel.
Meanwhile, 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 that of Olink Holdings for $3.1 billion, net of $96 million of acquired cash. The acquisition enhanced Thermo Fisher’s capabilities in the high-growth proteomics market with the addition of highly differentiated solutions. Through acquisitions, the company expects to deliver $125 million in adjusted operating income synergies in year five, driven by revenue synergies and cost efficiencies.
The company’s major acquisitions of 2023 are CorEvitas and MarqMetrix. The CorEvitas buyout advanced Thermo Fisher’s clinical research capabilities with a leading regulatory-grade registry platform. The acquisition of MarqMetrix added highly complementary Raman-based in-line PAT to Thermo Fisher’s portfolio.
Over the past three months, shares of TMO have gained 15.8% compared with the industry’s 5.6% growth. With the company consistently focusing on growing through strategic acquisitions and innovative new product launches, leveraging scale and expansion in high growth in emerging markets, we expect the stock to continue its upward movement in the coming days.
TMO's Downside Risks
The industry-wide trend of difficult macroeconomic conditions, in the form of geopolitical pressure leading to disruptions in economic activity, global supply chains and labor markets, is creating a challenging business environment for Thermo Fisher. International conflicts, including the Russia-Ukraine war and tension between China and Taiwan, have increased cybersecurity risks on a global basis. Further, volatile financial market dynamics and significant volatility in price and availability of goods and services are putting pressure on the company’s profitability. With sustained macroeconomic pressure, Thermo Fisher may struggle to keep its operating expenses in check.
Further, international markets contribute a substantial portion of Thermo Fisher’s revenues and the company intends to continue expanding its presence in these regions. International revenues and costs are subject to fluctuations in exchange rates that could affect a company’s reported revenues and profitability when translated into U.S. dollars. As Thermo Fisher’s international sales grow, exposure to fluctuations in currency exchange rates could have a larger effect on its financial results.
Boston Scientific’s shares have risen 58.7% in the past year. Estimates for the company’s earnings per share have remained constant at $2.40 for 2024 and at $2.71 for 2025 in the past 30 days. BSX’s earnings beat estimates in the trailing four quarters, delivering an average surprise of 7.2%. In the last reported quarter, it posted an earnings surprise of 6.9%.
Estimates for AxoGen’s 2024 loss per share have remained constant at 1 cent in the past 30 days. Shares of the company have surged 180.6% in the past year compared with the industry’s growth of 22.7%. AXGN’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 96.5%. In the last reported quarter, it delivered an earnings surprise of 200%.
Estimates for Phibro Animal Health’s 2024 earnings per share have risen 0.7% in the past 30 days. Shares of the company have surged 76.6% in the past year compared with the industry’s 24.2% growth. PAHC’s earnings surpassed estimates in three of the trailing four quarters and missed on one occasion, with the average surprise being 4.1%. In the last reported quarter, it delivered an earnings surprise of 20.6%.
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TMO Stock Gains From Innovation Amid Macroeconomic Issues
Strong electron microscopy growth and strategic buyouts are likely to drive Thermo Fisher Scientific’s (TMO - Free Report) growth. Yet, macroeconomic issues and currency fluctuations continue to dampen business growth. The stock carries a Zacks Rank #3 (Hold) currently.
Factors Driving Growth for TMO Stock
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. The pharma services business has been providing pharma and biotech customers with the services they need to develop and produce vaccines and therapies globally. In terms of the latest update, within this end market, biosciences and clinical research businesses are contributing to growth.
Within “academic and government” as well as in “industrial and applied” end markets, the company delivered strong growth in its electron microscopy business, driven by significant product launches. In the diagnostics and healthcare end market, despite the runoff of COVID-19 testing-related revenues, the company reported core revenue growth, highlighted by transplant diagnostic and immunodiagnostics businesses, as well as the healthcare market channel.
Meanwhile, 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 that of Olink Holdings for $3.1 billion, net of $96 million of acquired cash. The acquisition enhanced Thermo Fisher’s capabilities in the high-growth proteomics market with the addition of highly differentiated solutions. Through acquisitions, the company expects to deliver $125 million in adjusted operating income synergies in year five, driven by revenue synergies and cost efficiencies.
Thermo Fisher Scientific Inc. Price
Thermo Fisher Scientific Inc. price | Thermo Fisher Scientific Inc. Quote
The company’s major acquisitions of 2023 are CorEvitas and MarqMetrix. The CorEvitas buyout advanced Thermo Fisher’s clinical research capabilities with a leading regulatory-grade registry platform. The acquisition of MarqMetrix added highly complementary Raman-based in-line PAT to Thermo Fisher’s portfolio.
Over the past three months, shares of TMO have gained 15.8% compared with the industry’s 5.6% growth. With the company consistently focusing on growing through strategic acquisitions and innovative new product launches, leveraging scale and expansion in high growth in emerging markets, we expect the stock to continue its upward movement in the coming days.
TMO's Downside Risks
The industry-wide trend of difficult macroeconomic conditions, in the form of geopolitical pressure leading to disruptions in economic activity, global supply chains and labor markets, is creating a challenging business environment for Thermo Fisher. International conflicts, including the Russia-Ukraine war and tension between China and Taiwan, have increased cybersecurity risks on a global basis. Further, volatile financial market dynamics and significant volatility in price and availability of goods and services are putting pressure on the company’s profitability. With sustained macroeconomic pressure, Thermo Fisher may struggle to keep its operating expenses in check.
Further, international markets contribute a substantial portion of Thermo Fisher’s revenues and the company intends to continue expanding its presence in these regions. International revenues and costs are subject to fluctuations in exchange rates that could affect a company’s reported revenues and profitability when translated into U.S. dollars. As Thermo Fisher’s international sales grow, exposure to fluctuations in currency exchange rates could have a larger effect on its financial results.
Key Picks
Some better-ranked stocks in the broader medical space are Boston Scientific (BSX - Free Report) , AxoGen (AXGN - Free Report) and Phibro Animal Health (PAHC - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Boston Scientific’s shares have risen 58.7% in the past year. Estimates for the company’s earnings per share have remained constant at $2.40 for 2024 and at $2.71 for 2025 in the past 30 days. BSX’s earnings beat estimates in the trailing four quarters, delivering an average surprise of 7.2%. In the last reported quarter, it posted an earnings surprise of 6.9%.
Estimates for AxoGen’s 2024 loss per share have remained constant at 1 cent in the past 30 days. Shares of the company have surged 180.6% in the past year compared with the industry’s growth of 22.7%. AXGN’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 96.5%. In the last reported quarter, it delivered an earnings surprise of 200%.
Estimates for Phibro Animal Health’s 2024 earnings per share have risen 0.7% in the past 30 days. Shares of the company have surged 76.6% in the past year compared with the industry’s 24.2% growth. PAHC’s earnings surpassed estimates in three of the trailing four quarters and missed on one occasion, with the average surprise being 4.1%. In the last reported quarter, it delivered an earnings surprise of 20.6%.