MA-based medical instruments manufacturer, Thermo Fisher Scientific, Inc. (TMO Quick QuoteTMO - Free Report) is scheduled to report third-quarter 2016 results before the opening bell on Oct 27. Last quarter, the company posted a positive earnings surprise of 1.50%. The four-quarter trailing average beat is pegged at 1.50%. Let’s see how things are shaping up prior to this announcement.

Factors at Play

Thermo Fisher posted a strong second quarter, with both the top and the bottom line trumping estimates. The company aims to boost growth through the implementation of strategies and strengthening of its product offerings. These initiatives are likely to help the company post solid results in the third quarter as well.

The recently completed acquisition of FEI is the highlight of the yet-to-be reported quarter. With FEI’s leading electron microscopy platform, Thermo Fisher is now in a better position to help its life sciences customers accelerate advancement in structural biology. We currently await the integration of the acquisition. We are also looking forward to the integration and synergies from Affimetrix, another mega takeover by Thermo Fisher, which is expected to boost its offerings in the fast-growing flow cytometry market.

Management expects to expand its footprint in the emerging markets of China, South Korea, Southeast Asia and India. The growth is likely to be in applied markets such as environmental and food safeties as well as life science. We are also upbeat about the significant product launches in the third quarter and an enhancement in the company’s customer value proposition.

In the bioproduction and biosciences businesses, we anticipate strong and consistent growth in the forthcoming quarters. Strong productivity and incremental cost synergies are projected to improve operational efficiencies further.

However, while it is encouraging to note that the company expects 4.5% organic growth for full-year 2016, tough organic growth comp expectations for the third quarter may mar overall results. Additionally, the company recorded a mid single digits decline in the rest of the world, barring North America, Europe and Asia-Pacific. Moreover, increased competition and currency headwinds continue to raise caution.

Earnings Whispers

Our proven model does not conclusively show that Thermo Fisher is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Thermo Fisher’s earnings ESP is 0.00%, since both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.97.

Zacks Rank: Thermo Fisher has a Zacks Rank #2 which increases the predictive power of ESP. However, a 0.00% ESP makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a few companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Glaukos Corporation (GKOS Quick QuoteGKOS - Free Report) has an earnings ESP of +200% and a Zacks Rank #1.

Penumbra, Inc. (PEN Quick QuotePEN - Free Report) has an earnings ESP of +45.46% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Invuity, Inc. has an earnings ESP of +1.61% and a Zacks Rank #2.

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