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Thermo Fisher (TMO) Business Hurt by Low COVID Sales, FX Woe
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Thermo Fisher Scientific's (TMO - Free Report) business continues to get dampened by lower COVID-19 sales and slower economic activity in China. Also, currency fluctuations continue to dampen top-line growth. The stock carries a Zacks Rank #4 (Sell).
During the COVID-19 public health emergency, Thermo Fisher’s biosciences and bioproduction businesses have expanded their capacity to meet the needs of pharma and biotech customers to meet global vaccine manufacturing requirements.
However, since the past few quarters, Thermo Fisher has been experiencing a continuous decline in COVID testing-related demand. This is expected to decline further in 2023 as customer testing as well as therapy and vaccine demand declines. Sales of products related to COVID-19 testing in the second quarter of 2023 declined 87.3%. During the first six months of 2023, sales growth in all major regions declined due to decreased demand for COVID-19-related products.
Further, Thermo Fisher derives more than 50% of its revenues from the international market, which exposes it to fluctuations in foreign currency. In the past several years, the company’s earnings were affected significantly by foreign exchange headwind.
The challenging macroeconomic scenario and slower economic recovery in China 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. We remain cautious since growth could further moderate if the economic scenario worsens.
During the second quarter of 2023, Thermo Fisher registered a year-over-year decline in sales in North America and Asia Pacific.
On a positive note, Thermo Fisher is registering growth in most of its end markets. In terms of the pharma and biotech end market, of late, the biosciences and bioproduction businesses have expanded their capacity to meet the needs of pharma and biotech customers as these customers have expanded their own production volumes to meet global vaccine manufacturing requirements.
Additionally, the pharma services business has provided pharma and biotech customers with the services they need to develop and produce vaccines and therapies globally. In the second quarter, within the end market, the company registered the strongest growth in the pharma and biotech end market.
In academic and government, Thermo Fisher grew in the high single digits in the quarter. The company delivered strong growth in the electron microscopy and chromatography and mass spectrometry businesses, as well as research and safety market channel. In industrial and applied, the company grew in the low single digits in the quarter. The strongest growth in the end market was in analytical instruments businesses.
Meanwhile, Thermo Fisher’s Gibco Cell Culture for Bioprocessing, Chromatography and Protein Purification are already in high demand. The bioproduction business supports developers and manufacturers of biological-based therapeutics and vaccines with a portfolio of premium solutions and services focused on upstream cells. Per our model, Thermo Fisher’s LifeScience segment is expected to see 4.2% growth in 2024.
Shares of TMO have declined 9.9% in the past year compared with the industry's 5% decline.
Haemonetics’stock has risen 13.5% in the past year. Earnings estimates for Haemoneticshave increased from $3.56 to $3.74 in 2023 and $3.96 to $4.07 in 2024 in the past 30 days.
HAE’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 19.39%. In the last reported quarter, it posted an earnings surprise of 38.16%.
Estimates for Align Technologies’2023 EPS have increased from $8.31 to $8.75 in the past 30 days. Shares of the company have increased 24% in the past year compared with the industry’s rise of 10.5%.
ALGN’s earnings beat estimates in three of the trailing four quarters and missed the same in one. In the last reported quarter, it posted an earnings surprise of 9.9%.
Estimates for SiBone’s2023 loss have narrowed from $1.42 to $1.27 per share in the past 30 days. Shares of the company have increased 15.1% in the past year against the industry’s fall of 5.1%.
SIBN’s earnings beat estimates in each of the trailing four quarters, the average surprise being 20.37%. In the last reported quarter, SiBonedelivered an earnings surprise of 26.83%.
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Thermo Fisher (TMO) Business Hurt by Low COVID Sales, FX Woe
Thermo Fisher Scientific's (TMO - Free Report) business continues to get dampened by lower COVID-19 sales and slower economic activity in China. Also, currency fluctuations continue to dampen top-line growth. The stock carries a Zacks Rank #4 (Sell).
During the COVID-19 public health emergency, Thermo Fisher’s biosciences and bioproduction businesses have expanded their capacity to meet the needs of pharma and biotech customers to meet global vaccine manufacturing requirements.
However, since the past few quarters, Thermo Fisher has been experiencing a continuous decline in COVID testing-related demand. This is expected to decline further in 2023 as customer testing as well as therapy and vaccine demand declines. Sales of products related to COVID-19 testing in the second quarter of 2023 declined 87.3%. During the first six months of 2023, sales growth in all major regions declined due to decreased demand for COVID-19-related products.
Further, Thermo Fisher derives more than 50% of its revenues from the international market, which exposes it to fluctuations in foreign currency. In the past several years, the company’s earnings were affected significantly by foreign exchange headwind.
Thermo Fisher Scientific Inc. Price
Thermo Fisher Scientific Inc. price | Thermo Fisher Scientific Inc. Quote
The challenging macroeconomic scenario and slower economic recovery in China 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. We remain cautious since growth could further moderate if the economic scenario worsens.
During the second quarter of 2023, Thermo Fisher registered a year-over-year decline in sales in North America and Asia Pacific.
On a positive note, Thermo Fisher is registering growth in most of its end markets. In terms of the pharma and biotech end market, of late, the biosciences and bioproduction businesses have expanded their capacity to meet the needs of pharma and biotech customers as these customers have expanded their own production volumes to meet global vaccine manufacturing requirements.
Additionally, the pharma services business has provided pharma and biotech customers with the services they need to develop and produce vaccines and therapies globally. In the second quarter, within the end market, the company registered the strongest growth in the pharma and biotech end market.
In academic and government, Thermo Fisher grew in the high single digits in the quarter. The company delivered strong growth in the electron microscopy and chromatography and mass spectrometry businesses, as well as research and safety market channel. In industrial and applied, the company grew in the low single digits in the quarter. The strongest growth in the end market was in analytical instruments businesses.
Meanwhile, Thermo Fisher’s Gibco Cell Culture for Bioprocessing, Chromatography and Protein Purification are already in high demand. The bioproduction business supports developers and manufacturers of biological-based therapeutics and vaccines with a portfolio of premium solutions and services focused on upstream cells. Per our model, Thermo Fisher’s LifeScience segment is expected to see 4.2% growth in 2024.
Shares of TMO have declined 9.9% in the past year compared with the industry's 5% decline.
Key Picks
Some better-ranked stocks in the broader medical space are Haemonetics (HAE - Free Report) , Align Technologies (ALGN - Free Report) and SiBone (SIBN - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Haemonetics’stock has risen 13.5% in the past year. Earnings estimates for Haemoneticshave increased from $3.56 to $3.74 in 2023 and $3.96 to $4.07 in 2024 in the past 30 days.
HAE’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 19.39%. In the last reported quarter, it posted an earnings surprise of 38.16%.
Estimates for Align Technologies’2023 EPS have increased from $8.31 to $8.75 in the past 30 days. Shares of the company have increased 24% in the past year compared with the industry’s rise of 10.5%.
ALGN’s earnings beat estimates in three of the trailing four quarters and missed the same in one. In the last reported quarter, it posted an earnings surprise of 9.9%.
Estimates for SiBone’s2023 loss have narrowed from $1.42 to $1.27 per share in the past 30 days. Shares of the company have increased 15.1% in the past year against the industry’s fall of 5.1%.
SIBN’s earnings beat estimates in each of the trailing four quarters, the average surprise being 20.37%. In the last reported quarter, SiBonedelivered an earnings surprise of 26.83%.