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Thermo Fisher (TMO) Q3 Earnings Beat on Life Sciences Sales
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Thermo Fisher Scientific Inc.'s (TMO - Free Report) third-quarter 2020 adjusted earnings per share of $5.63 beat the Zacks Consensus Estimate by 28.8%. The figure surged 91.5% year over year. The adjusted number excludes certain non-recurring expenses including asset amortization costs and certain restructuring costs.
On a reported basis, earnings per share were $4.84 compared with $1.88 a year ago.
Significant COVID-19 led business expansion as well as the company’s base business growth contributed to such a stunning bottom-line performance.
Revenues in the quarter under review grossed $8.52 billion, up 35.9% year over year. The top line exceeded the Zacks Consensus Estimate by 10%.
In the third quarter, the company generated $2 billion of COVID-19 related revenues and its base business finally returned to growth.
Quarter in Detail
Organic revenues in the reported quarter grew 34% year over year. Favorable currency translation and acquisitions increased revenues by 1% each.
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 (40.2% of total revenues) improved 101.3% year over year to $3.42 billion while Analytical Instruments Segment sales (15.7%) declined a marginal 1.6% to $1.34 billion.
Thermo Fisher Scientific Inc. Price, Consensus and EPS Surprise
Revenues at the Laboratory Products and Services segment (36.5%) rose 18.8% to $3.11 billion. The Specialty Diagnostics segment (16.8%) recorded 62.7% year-over-year rise in revenues to $1.43 billion.
Gross margin of 52.3% in the third quarter expanded 625 basis points (bps) year over year on 54.3% rise in gross profits. Adjusted operating margin for the quarter came in at 33.5%, reflecting an expansion of 1103 bps.
The company exited the third quarter of 2020 with cash and cash equivalents of $7.54 billion compared with $5.82 billion at the end of the second quarter. Year-to-date net cash provided by operating activities was $4.95 billion compared with $3.06 billion a year ago.
Update on Guidance
We note that on Apr 6, 2020, Thermo Fisher had withdrawn its 2020 guidance due to the COVID-19 pandemic-led crisis and related customer impact. The company has not mentioned anything about its rest of the year’s projection in this earnings release. However, it noted that it is on track to deliver a record year, positioning the company for an even brighter future.
COVID-19 Related Major Developments in Q3
In the third quarter, Thermo Fisher expanded its global pandemic response. This includes the launch of the Amplitude Solution to automate high-throughput PCR-based testing, significant capacity expansion for viral transport media production in Europe and introduction of two COVID-19 antibody tests that are currently available in the United States and Europe.
The company has been increasing itscapacity to help governments and biopharma customers globally meet future demand for new therapies and vaccines. In this regard, it recently partnered with the Economic Development Board of Singapore to build its first pharma services facility there, which will include the only high-speed live virus filling line in Singapore.
It also expanded its center of excellence in Suzhou, China, by opening a new bioproduction factory for manufacturing single-use technologies to meet demand for biologics in the Asia-Pacific region.
Bottom Line
Thermo Fisher ended the third quarter with better-than-expected numbers. The company delivered an outstanding quarterly performance, leveraging on its capacity to extend support amid the pandemic. In the quarter, it generated $2 billion of COVID-19 related revenues.
We are encouraged about the exceptionally strong year-over-year revenue growth at Life Sciences Solutions segment. However, the coronavirus outbreak has massively disrupted the global supply chain. Given its huge international base, Thermo Fisher too recorded a decline in its quarterly Analytical Instruments revenues. Meanwhile, margin expansion in the third quarter was encouraging.
Zacks Rank and Other Key Picks
Currently, Thermo Fisher carries a Zacks Rank #1 (Strong Buy).
The Zacks Consensus Estimate for Insulet’s third-quarter 2020 adjusted EPS is currently pegged at 6 cents. The consensus estimate for third-quarter revenues stands at $220.89 million. The company, which currently carries a Zacks Rank #1, is expected to release results soon. You can see the complete list of today’s Zacks #1 Rank stocks here.
IDEXX currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its third-quarter 2020 adjusted EPS is currently pegged at $1.41. The consensus estimate for third-quarter revenues stands at $666.7 million.
The Zacks Consensus Estimate for ResMed's first-quarter fiscal 2021 adjusted EPS is currently pegged at 95 cents. The consensus estimate for revenues stands at $702.4 million. It currently has a Zacks Rank #2.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Thermo Fisher (TMO) Q3 Earnings Beat on Life Sciences Sales
Thermo Fisher Scientific Inc.'s (TMO - Free Report) third-quarter 2020 adjusted earnings per share of $5.63 beat the Zacks Consensus Estimate by 28.8%. The figure surged 91.5% year over year. The adjusted number excludes certain non-recurring expenses including asset amortization costs and certain restructuring costs.
On a reported basis, earnings per share were $4.84 compared with $1.88 a year ago.
Significant COVID-19 led business expansion as well as the company’s base business growth contributed to such a stunning bottom-line performance.
Revenues in the quarter under review grossed $8.52 billion, up 35.9% year over year. The top line exceeded the Zacks Consensus Estimate by 10%.
In the third quarter, the company generated $2 billion of COVID-19 related revenues and its base business finally returned to growth.
Quarter in Detail
Organic revenues in the reported quarter grew 34% year over year. Favorable currency translation and acquisitions increased revenues by 1% each.
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 (40.2% of total revenues) improved 101.3% year over year to $3.42 billion while Analytical Instruments Segment sales (15.7%) declined a marginal 1.6% to $1.34 billion.
Thermo Fisher Scientific Inc. Price, Consensus and EPS Surprise
Thermo Fisher Scientific Inc. price-consensus-eps-surprise-chart | Thermo Fisher Scientific Inc. Quote
Revenues at the Laboratory Products and Services segment (36.5%) rose 18.8% to $3.11 billion. The Specialty Diagnostics segment (16.8%) recorded 62.7% year-over-year rise in revenues to $1.43 billion.
Gross margin of 52.3% in the third quarter expanded 625 basis points (bps) year over year on 54.3% rise in gross profits. Adjusted operating margin for the quarter came in at 33.5%, reflecting an expansion of 1103 bps.
The company exited the third quarter of 2020 with cash and cash equivalents of $7.54 billion compared with $5.82 billion at the end of the second quarter. Year-to-date net cash provided by operating activities was $4.95 billion compared with $3.06 billion a year ago.
Update on Guidance
We note that on Apr 6, 2020, Thermo Fisher had withdrawn its 2020 guidance due to the COVID-19 pandemic-led crisis and related customer impact. The company has not mentioned anything about its rest of the year’s projection in this earnings release. However, it noted that it is on track to deliver a record year, positioning the company for an even brighter future.
COVID-19 Related Major Developments in Q3
In the third quarter, Thermo Fisher expanded its global pandemic response. This includes the launch of the Amplitude Solution to automate high-throughput PCR-based testing, significant capacity expansion for viral transport media production in Europe and introduction of two COVID-19 antibody tests that are currently available in the United States and Europe.
The company has been increasing itscapacity to help governments and biopharma customers globally meet future demand for new therapies and vaccines. In this regard, it recently partnered with the Economic Development Board of Singapore to build its first pharma services facility there, which will include the only high-speed live virus filling line in Singapore.
It also expanded its center of excellence in Suzhou, China, by opening a new bioproduction factory for manufacturing single-use technologies to meet demand for biologics in the Asia-Pacific region.
Bottom Line
Thermo Fisher ended the third quarter with better-than-expected numbers. The company delivered an outstanding quarterly performance, leveraging on its capacity to extend support amid the pandemic. In the quarter, it generated $2 billion of COVID-19 related revenues.
We are encouraged about the exceptionally strong year-over-year revenue growth at Life Sciences Solutions segment. However, the coronavirus outbreak has massively disrupted the global supply chain. Given its huge international base, Thermo Fisher too recorded a decline in its quarterly Analytical Instruments revenues. Meanwhile, margin expansion in the third quarter was encouraging.
Zacks Rank and Other Key Picks
Currently, Thermo Fisher carries a Zacks Rank #1 (Strong Buy).
Some other top-ranked stocks in the same space include Insulet (PODD - Free Report) , IDEXX Laboratories (IDXX - Free Report) and ResMed (RMD - Free Report) .
The Zacks Consensus Estimate for Insulet’s third-quarter 2020 adjusted EPS is currently pegged at 6 cents. The consensus estimate for third-quarter revenues stands at $220.89 million. The company, which currently carries a Zacks Rank #1, is expected to release results soon. You can see the complete list of today’s Zacks #1 Rank stocks here.
IDEXX currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its third-quarter 2020 adjusted EPS is currently pegged at $1.41. The consensus estimate for third-quarter revenues stands at $666.7 million.
The Zacks Consensus Estimate for ResMed's first-quarter fiscal 2021 adjusted EPS is currently pegged at 95 cents. The consensus estimate for revenues stands at $702.4 million. It currently has a Zacks Rank #2.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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