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Thermo Fisher Scientific, Inc. (TMO - Free Report) reported better-than-expected first-quarter 2017 earnings results. Adjusted earnings per share (EPS) in the quarter came in at $2.08, exceeding the Zacks Consensus Estimate by 2.9% and ahead of the year-ago quarter figure by 15.6%.
On a reported basis, first-quarter EPS of $1.40 marked 39% year-over-year improvement.
Revenues for the quarter came in at $4.77 billion, up 11% year over year. Sales also exceeded the Zacks Consensus Estimate of $4.68 billion by 1.9%.
Thermo Fisher Scientific Inc Price, Consensus and EPS Surprise
Organic revenues in the first quarter grew 4% year over year. Revenues rose 8% on the back of acquisitions. Total revenue was 1%, offset by currency translation.
Thermo Fisher currently operates under four business segments: Life Sciences Solutions, Analytical Instruments, Specialty Diagnostics and Laboratory Products and Services.
Revenues from the Life Sciences Solutions Segment improved 12% year over year to $1.36 billion while Analytical Instruments Segment sales grew 39% to $1.05 billion, reflecting the acquisition of FEI Company. Revenues from the Laboratory Products and Services Segment grew 3% to $1.70 billion while the Specialty Diagnostics Segment recorded a 1% increase to $866 million.
Gross margin of 48.6% during the first quarter was up 70 basis points (bps) year over year on 12.5% rise in gross profit. Adjusted operating margin expanded approximately 53 bps to 21.2% despite the company incurring 9.8% rise in selling, general and administrative expenses and 22% increase in research and development expenses.
The company exited the first quarter with cash and cash equivalents of $713.3 million compared with $786.2 million at the end of the previous year. First-quarter operating cash flow was $361.5 million compared with the year-ago figure of $334.7 million.
Guidance Raised
Backed by a solid first-quarter performance and on a less adverse foreign exchange environment forecast, Thermo Fisher increased its full-year 2017 financial guidance. The revenue guidance has been raised to a new range of $19.51–$19.71 billion (growth of 7% to 8% from the previous year) from the earlier band of $19.38–$19.62 billion. The current Zacks Consensus Estimate of $19.53 billion remains close to the lower-end of the guided range.
The company has also increased its adjusted EPS guidance to a new range of $9.12 to $9.28, reflecting growth of 10% to 12% from the previous year (earlier prediction was $9.06 to $9.24). The Zacks Consensus Estimate of $9.16 per share also remains near the lower-end of the band.
Bottom Line
Thermo Fisher ended the first quarter on a promising note with both adjusted earnings and revenues ahead of the Zacks Consensus Estimate. We remain encouraged by the company’s series of product launches along with strong growth in emerging markets and better management observed in its customer value proposition. Thermo Fisher’s acquisition of FEI has already started to boost the company’s analytical instruments portfolio. The increased guidance is all the more encouraging indicating the fact that this overall bullish trend will continue through 2017.
Zacks Rank & Other Key Picks
Thermo Fisher currently carries a Zacks Rank #3 (Hold).Better-ranked stocks in the broader Medical space include Inogen, Inc. (INGN - Free Report) , ZELTIQ Aesthetics, Inc. and Hill-Rom Holdings, Inc. . While Inogen and ZELTIQ Aesthetics sport a Zacks Rank #1 (Strong Buy) while Hill-Rom carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Inogen gained 62% in the last one year, compared with the S&P 500’s gain of 14.0%. The company reported a stellar four-quarter positive average earnings surprise of over 49.08%.
ZELTIQ Aesthetics surged 82.8% in the last one year, compared with the S&P 500’s gain. Its four-quarter average earnings surprise was a positive of 12.30%.
Hill-Rom gained over 33.7% in the past one year, better than the S&P 500 mark. It posted a trailing four-quarter positive average earnings surprise of 3.1%.
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Thermo Fisher (TMO) Tops Q1 Earnings, Sales, Raises Guidance
Thermo Fisher Scientific, Inc. (TMO - Free Report) reported better-than-expected first-quarter 2017 earnings results. Adjusted earnings per share (EPS) in the quarter came in at $2.08, exceeding the Zacks Consensus Estimate by 2.9% and ahead of the year-ago quarter figure by 15.6%.
On a reported basis, first-quarter EPS of $1.40 marked 39% year-over-year improvement.
Revenues for the quarter came in at $4.77 billion, up 11% year over year. Sales also exceeded the Zacks Consensus Estimate of $4.68 billion by 1.9%.
Thermo Fisher Scientific Inc Price, Consensus and EPS Surprise
Thermo Fisher Scientific Inc Price, Consensus and EPS Surprise | Thermo Fisher Scientific Inc Quote
Quarter in Detail
Organic revenues in the first quarter grew 4% year over year. Revenues rose 8% on the back of acquisitions. Total revenue was 1%, offset by currency translation.
Thermo Fisher currently operates under four business segments: Life Sciences Solutions, Analytical Instruments, Specialty Diagnostics and Laboratory Products and Services.
Revenues from the Life Sciences Solutions Segment improved 12% year over year to $1.36 billion while Analytical Instruments Segment sales grew 39% to $1.05 billion, reflecting the acquisition of FEI Company. Revenues from the Laboratory Products and Services Segment grew 3% to $1.70 billion while the Specialty Diagnostics Segment recorded a 1% increase to $866 million.
Gross margin of 48.6% during the first quarter was up 70 basis points (bps) year over year on 12.5% rise in gross profit. Adjusted operating margin expanded approximately 53 bps to 21.2% despite the company incurring 9.8% rise in selling, general and administrative expenses and 22% increase in research and development expenses.
The company exited the first quarter with cash and cash equivalents of $713.3 million compared with $786.2 million at the end of the previous year. First-quarter operating cash flow was $361.5 million compared with the year-ago figure of $334.7 million.
Guidance Raised
Backed by a solid first-quarter performance and on a less adverse foreign exchange environment forecast, Thermo Fisher increased its full-year 2017 financial guidance. The revenue guidance has been raised to a new range of $19.51–$19.71 billion (growth of 7% to 8% from the previous year) from the earlier band of $19.38–$19.62 billion. The current Zacks Consensus Estimate of $19.53 billion remains close to the lower-end of the guided range.
The company has also increased its adjusted EPS guidance to a new range of $9.12 to $9.28, reflecting growth of 10% to 12% from the previous year (earlier prediction was $9.06 to $9.24). The Zacks Consensus Estimate of $9.16 per share also remains near the lower-end of the band.
Bottom Line
Thermo Fisher ended the first quarter on a promising note with both adjusted earnings and revenues ahead of the Zacks Consensus Estimate. We remain encouraged by the company’s series of product launches along with strong growth in emerging markets and better management observed in its customer value proposition. Thermo Fisher’s acquisition of FEI has already started to boost the company’s analytical instruments portfolio. The increased guidance is all the more encouraging indicating the fact that this overall bullish trend will continue through 2017.
Zacks Rank & Other Key Picks
Thermo Fisher currently carries a Zacks Rank #3 (Hold).Better-ranked stocks in the broader Medical space include Inogen, Inc. (INGN - Free Report) , ZELTIQ Aesthetics, Inc. and Hill-Rom Holdings, Inc. . While Inogen and ZELTIQ Aesthetics sport a Zacks Rank #1 (Strong Buy) while Hill-Rom carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Inogen gained 62% in the last one year, compared with the S&P 500’s gain of 14.0%. The company reported a stellar four-quarter positive average earnings surprise of over 49.08%.
ZELTIQ Aesthetics surged 82.8% in the last one year, compared with the S&P 500’s gain. Its four-quarter average earnings surprise was a positive of 12.30%.
Hill-Rom gained over 33.7% in the past one year, better than the S&P 500 mark. It posted a trailing four-quarter positive average earnings surprise of 3.1%.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>