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Thermo Fisher (TMO) to Report Q3 Earnings: What's in Store?

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Thermo Fisher Scientific Inc. (TMO - Free Report) is slated to release third-quarter 2021 results on Oct 20, before market open.

In the last reported quarter, the company’s earnings of $5.60 per share exceeded the Zacks Consensus Estimate by 1.63%. Its earnings surpassed estimates in each of the trailing four quarters, the average surprise being 10.40%.

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

Factors at Play

Through the first half of 2021, Thermo Fisher’s Analytical Instruments segment registered a strong rebound despite the negative impact of COVID-19 in the form of muted demand on global economic slowdown. In the third quarter too, we expect this segment to have registered strong growth in Chromatography and Mass Spectrometry, and the Materials and Structural Analysis businesses.

The company’s recent launches like the new Thermo Scientific Orbitrap IQ-X Tribrid Mass Spectrometer (which further extends the impact of industry-leading Orbitrap platform to accelerate small molecule analysis from metabolites and other complex compounds) should have contributed to its Q3 top line.

Further, the end markets for chemical analysis are gradually returning to growth. 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 Q3.

Within the Life-Science Solutions segment, the company is expected to have registered robust growth in genetic sciences, biosciences and bioproduction businesses on the ramp-up of economic activity globally and the company’s pandemic response. Within biosciences, Thermo Fisher recently launched several new products, including two instruments to advance cell analysis — the Invitrogen Bigfoot Spectral Sorter and the Invitrogen Attune CytPix Flow Cytometer. These are expected to have strongly contributed to the company’s Q3 revenues.

Most of the company’s COVID-19 response revenues are likely to have been recognized in the Life-Science Solutions segment. With the emergence of the Delta variant through the third-quarter months, this segment is likely to have also registered top-line contributions from growing demand for COVID-19 testing. Further, vaccine and therapy production supplies (recognized in the BioProduction and Biosciences businesses) should also have contributed strongly to the company’s growth in Q3.

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 continued growth in the immunodiagnostics and transplant diagnostics businesses. Looking at the consistently growing resurgence of the virus-led healthcare needs, the Microbiology, Healthcare Market Channel and Clinical Diagnostics businesses are expected to have witnessed strong growth.

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.

Q3 Estimates

The Zacks Consensus Estimate for total revenues of $8.77 billion for the third quarter suggests a 3% dip from the prior-year quarter’s reported figure. The consensus mark for earnings of $4.60 per share indicates an 18.3% plunge from the year-ago quarter’s reported figure.

What Our Quantitative Model Predicts

Per our proven model, stocks with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) have a good chance of beating estimates. This is exactly the case as you can see:

Earnings ESP: Thermo Fisher has an Earnings ESP of +8.27%. 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 #2.

Other Stocks Worth a Look

Here are three other medical stocks with the right mix of elements to surpass expectations this earnings season.

UnitedHealth Group Incorporated (UNH - Free Report) has an Earnings ESP of +1.95% and a Zacks Rank of 2. The company is slated to release its third-quarter 2021 results on Oct 14.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Quest Diagnostics Incorporated (DGX - Free Report) has an Earnings ESP of +12.10% and a Zacks Rank of 2, at present. The company is slated to release its third-quarter 2021 results on Oct 21.

West Pharmaceutical Services, Inc. (WST - Free Report) has an Earnings ESP of +1.93% and is a Zacks #2 Ranked stock. The company is slated to release its third-quarter 2021 results on Oct 28.

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