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Thermo Fisher (TMO) to Report Q4 Earnings: What's in Store?

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Thermo Fisher Scientific Inc. (TMO - Free Report) is slated to release fourth-quarter and full-year 2020 results on Feb 1, before market open.

In the last reported quarter, the company’s earnings of $5.63 per share exceeded the Zacks Consensus Estimate by 28.8%. Its earnings surpassed estimates in the trailing four quarters, the average surprise being 20.1%.

Let's discuss the factors that are likely to get reflected in the upcoming results.

Factors at Play

In the last reported quarter, Thermo Fisher’s Analytical Instruments segment’s performance was dull due to a significant negative impact of COVID-19 in the form of global supply chain disruption. However, with international trade gradually resuming, an increased level of customer activity and good commercial executions are expected to have led to better sales for this segment.We note that the company’s chromatography and mass spectrometry businesses within Analytical Instruments returned to growth in the last reported quarter. Given the fact that customer activity is fast picking up, these two businesses are expected to have performed better in Q4.

The company’s Life-Science Solutions and Specialty Diagnostics segments are expected to have registered positive contributions, banking on COVID-19-led growing healthcare needs. Life-Science Solutions is mainly related to testing kits. With the EUA for its COVID-19 PCR test earlier this year, we expect the segment to have recorded full-quarter sales contribution. Further, this test received the CE mark in the European Union. Europe, being another major virus-affected continent, is anticipated to have generated strong demand for this test during the fourth quarter. In addition, this diagnostic test received designated approvals in Canada, Singapore, India, Australia and New Zealand. Thermo Fisher has ramped up production to meet this growing global demand. Its fourth-quarter results are expected to reflect these developments.

Theintroduction of two COVID-19 antibody tests that are currently available in the United States and Europe are expected to have reported significant full-quarter contribution in the fourth quarter. Also, the OmniPath ELISA antibody test received FDA’s EUA for the qualitative detection of total antibodies. This too is expected to have contributed strongly to the company’s upcoming results.

Within the Specialty Diagnostics business, the company is expected to have generated revenues within viral transport media microbiology business and from tests and PP&E in the healthcare market channel. Just like the last-reported quarter, COVID-19 response revenues are expected to have been significant in the fourth quarter too, banking on growth in microbiology healthcare market channel and clinical diagnostics businesses. Also, we expect a strong pickup in activity within routine diagnostic testing. particularly the immunodiagnostics and transplant diagnostics businesses.

Within the Laboratory Products and Services segment, the company is expected to have gained from strong productivity and volume leverage within the pharma services business and the research and safety market channel. Also, the PPE business in the research and safety market channel as well as plastics used in testing workflows and cold storage equipment manufactured by the lab products business are expected to have generated strong sales growth in the fourth quarter.

Q4 Estimates

The Zacks Consensus Estimate for total revenues of $9.27 billion for the fourth quarter suggests growth of 35.7% from the prior-year quarter’s reported figure. The consensus mark for earnings of $6.36 per share indicates 79.2% rise from the year-ago quarter’s reported figure.

What Our Quantitative Model Predicts

Our proven model predicts an earnings beat for Thermo Fisher this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is exactly the case here.

Earnings ESP: Thermo Fisher has an Earnings ESP of +5.52%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #3.

Other Stocks Worth a Look

Here are three medical stocks worth considering from the same space with the right mix of elements to surpass expectations this earnings season.

Anthem, Inc. (ANTM - Free Report) currently has a Zacks Rank #2 and an Earnings ESP of +17.04%. The company is scheduled to report fourth-quarter 2020 earnings on Feb 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Teladoc Health, Inc. (TDOC - Free Report) has an Earnings ESP of +31.58% and a Zacks Rank of 2, at present. The company is slated to release fourth-quarter 2020 numbers on Feb 24.

Tenet Healthcare (THC - Free Report) has an Earnings ESP of +7.10% and a Zacks Rank of 1, at present. The company is slated to release fourth-quarter 2020 numbers on Feb 9.

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