A month has gone by since the last earnings report for Thermo Fisher Scientific (TMO Quick QuoteTMO - Free Report) . Shares have lost about 10.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Thermo Fisher due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Thermo Fisher Beats on Q4 Earnings on Growth In All Lines

Thermo Fisher’s fourth-quarter 2020 adjusted earnings per share of $7.09 beat the Zacks Consensus Estimate by 3.4%. The figure surged 99.7% 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 $6.24 compared with $2.49 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.

For the full year, adjusted earnings were $19.55 per share, reflecting a 58.3% rise from the year-ago period. It also beat the Zacks Consensus Estimate by 1.1%.

Revenues in the quarter under review grossed $10.55 billion, up 54.5% year over year. The top line exceeded the Zacks Consensus Estimate by 2.6%.

In the fourth quarter, the company generated $3.2 billion of COVID-19 response revenues and reported accelerated growth in its base business.

Total revenues for 2020 were $32.2 billion, a 26.3% rise from the year-ago period. This came ahead of the Zacks Consensus Estimate by 4.3%.

Quarter in Detail

Organic revenues in the reported quarter grew 51% year over year. Favorable currency translation increased revenues by 3%.

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 (41.4% of total revenues) improved 138% year over year to $4.37 billion while Analytical Instruments Segment sales (15.5%) rose 8% to $1.64 billion.
Revenues at the Laboratory Products and Services segment (34.3%) rose 28.8% to $3.62 billion. The Specialty Diagnostics segment (18.6%) recorded 109% year-over-year rise in revenues to $1.97 billion.

Gross margin of 53.9% in the fourth quarter expanded 761 basis points (bps) year over year on 79.9% rise in gross profits. Adjusted operating margin for the quarter came in at 33.3%, reflecting an expansion of 858 bps.

The company exited 2020 with cash and cash equivalents of $10.33 billion compared with $7.54 billion at the end of the third quarter. Full-year net cash provided by operating activities was $8.29 billion compared with $4.97 billion a year ago.

2021 Guidance

For the full year, the company expects to deliver revenues of $35.1 billion indicating reported revenue growth of 9%. It estimates adjusted earnings per share of $21.62 for 2021, an 11% growth from the year-ago period. The Zacks Consensus Estimate for adjusted earnings per share is pegged at $20.12 on revenues of $33.34 billion.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 26.84% due to these changes.

VGM Scores

Currently, Thermo Fisher has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Thermo Fisher has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.