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Thermo Fisher (TMO) to Report Q2 Earnings: What's in Store?

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Thermo Fisher Scientific Inc. (TMO - Free Report) is slated to release second-quarter 2021 results on Jul 28, before market open.

In the last reported quarter, the company’s earnings of $7.21 per share exceeded the Zacks Consensus Estimate by 7.77%. Its earnings surpassed estimates in the trailing four quarters, the average surprise being 21.41%.

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

Factors at Play

Since the past two quarters, Thermo Fisher’s Analytical Instruments segment has been registering strong rebound despite the negative impact of COVID-19 in the form of muted demand on global economic slowdown. In the second quarter too, we expect this segment to have registered strong growth in Chromatography and Mass Spectrometry as well as the Materials and Structural Analysis businesses. Further, the end markets for chemical analysis are gradually returning to growth. The company launched two new Thermo Scientific Orbitrap Exploris GC-Mass Spectrometers, which further extended the potential of Orbitrap franchise in toxicology and metabolomics. In materials and structural analysis, Thermo Fisher launched the Thermo Scientific Spectra Ultra, a new-generation scanning transmission electron microscope for material science applications. Given the fact that customer demand is high, we expect the businesses to have performed sequentially better in Q2.

Within Life-Science Solutions segment, the company is expected to have registered robust growth in genetic sciences, biosciences and bioproduction businesses on ramp up of economic activity globally and the company’s pandemic response. The company’s majority of the COVID-19 response revenues are likely to have been recognized in the Life-Science Solutions segment. With extensive vaccine rollouts through the second quarter, this segment is likely to have also registered top-line contributions from vaccine and therapy production supplies (recognized in the BioProduction and Biosciences businesses). However, in terms of testing, through the months of Q2, on falling numbers of COVID-19 case count, the segment is expected to have registered sequential decline in revenue contributions from COVID-19 testing kits and reagents for lab developed tests sales.

The Specialty Diagnostics segment (Clinical Diagnostics business from the molecular controls that go into testing kits) too is expected to have registered positive contributions in the form of COVID-19-response revenues. Looking at consistently growing resurgence of virus-led healthcare needs, Microbiology, Healthcare Market Channel and Clinical Diagnostics businesses are expected to have witnessed strong growth.

Further, greater hospital visits on dipping newcase counts might have increased the level of routine diagnostics testing activity in Q2, particularly for 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 second quarter.

Q2 Estimates

The Zacks Consensus Estimate for total revenues of $8.77 billion for the second quarter suggests growth of 26.7% from the prior-year quarter’s reported figure. The consensus mark for earnings of $5.51 per share indicates 41.7% rise from the year-ago quarter’s reported figure.

What Our Quantitative Model Predicts

Our proven model does not conclusively predict 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 however not the case as you can see below.

Earnings ESP: Thermo Fisher has an Earnings ESP of -0.54%. 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.

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.

Globus Medical, Inc. (GMED - Free Report) has an Earnings ESP of +2.51% and a Zacks Rank of 2. The company is slated to release its second-quarter 2021 results on Aug 4.  You can see the complete list of today’s Zacks #1 Rank stocks here.

ResMed Inc. (RMD - Free Report) has an Earnings ESP of +2.40% and a Zacks Rank of 2, at present. The company is slated to release its fourth-quarter fiscal 2021 results on Aug 5.

Zimmer Biomet Holdings, Inc. (ZBH - Free Report) has an Earnings ESP of +2.58% and is a Zacks #2 Ranked stock. The company is slated to release its second-quarter 2021 results on Aug 3.