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Thermo Fisher (TMO) Q4 Earnings Beat Estimates, Margins Down
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Thermo Fisher Scientific Inc.'s (TMO - Free Report) fourth-quarter 2021 adjusted earnings per share (EPS) of $6.54 beat the Zacks Consensus Estimate by 25.3%. However, the figure declined 7.8% year over year.
The adjusted number excludes certain non-recurring expenses, including asset amortization costs and certain restructuring costs.
GAAP EPS was $4.17, reflecting a 33.2% drop on a year-over-year basis.
The significant contribution from COVID-19 response revenues as well as acceleration in the company’s base business drove the company’s bottom line in the fourth quarter.
For the full year, adjusted earnings were $25.13 per share, reflecting a 28.5% rise from the year-ago period. It also beat the Zacks Consensus Estimate by 5.8%.
Revenues in Detail
Revenues in the quarter under review grossed $10.70 billion, up 1.4% year over year. The top line exceeded the Zacks Consensus Estimate by 18.6%.
Thermo Fisher Scientific Inc. Price, Consensus and EPS Surprise
Total revenues for 2021 were $39.21 billion, reflecting a 21.7% rise from the year-ago period. The figure beat the Zacks Consensus Estimate by 4.6%.
Segment Details
Organic revenues in the reported quarter fell 4% year over year, while currency translation lowered revenues by 1%. Acquisitions contributed 6% to the top line and organic revenue growth from the base business grew 8%. The company generated $2.45 billion of COVID-19 response revenues (effects of COVID-19 response revenues from acquired businesses and foreign currency translation) in the reported quarter.
Thermo Fisher operates under four business segments — Life Sciences Solutions, Analytical Instruments, Specialty Diagnostics, and Laboratory Products and Biopharma Services.
Revenues at the Life Sciences Solutions segment (38.8% of total revenues) declined 4.9% year over year to $4.15 billion while Analytical Instruments Segment sales (16.1%) improved 5.4% to $1.73 billion.
Revenues at the Laboratory Products and Biopharma Services segment (39.2%) rose 16% to $4.19 billion. The Specialty Diagnostics segment (13.5%) recorded a 26.4% year-over-year fall in revenues to $1.45 billion.
Margin Analysis
Gross margin of 50.5% in the fourth quarter contracted 341 basis points (bps) year over year on a 4.9% drop in gross profits.
In the quarter, selling, general and administrative expenses increased 9.2% to $1.96 billion. Research and development expenses were $392 million, up 4.3% year over year.
Adjusted operating margin for the quarter came in at 28.5%, reflecting a contraction of 481 bps.
Financial Position
The company exited 2021 with cash and cash equivalents of $4.48 billion compared with $12.03 billion at the end of the third quarter.
Cumulative net cash provided by operating activities was $9.54 billion compared with $8.29 billion a year ago.
Meanwhile, Thermo Fisher has a consistent dividend-paying history with five-year annualized dividend growth being 13.9%.
Guidance
The company stated that it will come up with its 2022 financial guidance on its earnings conference call.
Our Take
Thermo Fisher exited the fourth quarter with better-than-expected results. The robust year-over-year revenue growth across the Analytical Instruments and the Laboratory Products and Biopharma Services segments appear promising. The revenue contributions from the company’s acquisitions also instill optimism. Further, Thermo Fisher’s strategic acquisitions of PPD, Inc. and PeproTech, and accelerated investments in expanding bioproduction capacity raise investors’ confidence.
However, the year-over-year decline in fourth-quarter earnings raises apprehension. The decline in revenues at the other two segments is also disappointing. The contraction of both margins does not bode well either.
Zacks Rank and Key Picks
Thermo Fisher currently carries a Zacks Rank #3 (Hold).
Here are a few stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle.
Laboratory Corporation of America Holdings (LH - Free Report) or LabCorp has an Earnings ESP of +9.21% and a Zacks Rank of #1 (Strong Buy). LabCorp will release fourth quarter and full-year 2021 results on Feb 10. You can see the complete list of today’s Zacks #1 Rank stocks here.
LabCorp’s long-term earnings growth rate is estimated at 10.6%. LH’s earnings yield of 6.8% compares favorably with the industry’s 4.3%.
AMN Healthcare Services, Inc. (AMN - Free Report) has an Earnings ESP of +10.29% and a Zacks Rank of #1. AMN Healthcare is slated to release fourth-quarter and full-year 2021 results on Feb 17.
AMN Healthcare’s long-term earnings growth rate is estimated at 16.2%. AMN’s earnings yield of 6.5% compares favorably with the industry’s 0.9%.
Henry Schein, Inc. (HSIC - Free Report) has an Earnings ESP of +1.94% and a Zacks Rank of #2. The company will report fourth quarter and full-year 2021 results on Feb 15.
Henry Schein’s long-term earnings growth rate is estimated at 11.8%. HSIC’s earnings yield of 6.2% compares favorably with the industry’s 4.3%.
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Thermo Fisher (TMO) Q4 Earnings Beat Estimates, Margins Down
Thermo Fisher Scientific Inc.'s (TMO - Free Report) fourth-quarter 2021 adjusted earnings per share (EPS) of $6.54 beat the Zacks Consensus Estimate by 25.3%. However, the figure declined 7.8% year over year.
The adjusted number excludes certain non-recurring expenses, including asset amortization costs and certain restructuring costs.
GAAP EPS was $4.17, reflecting a 33.2% drop on a year-over-year basis.
The significant contribution from COVID-19 response revenues as well as acceleration in the company’s base business drove the company’s bottom line in the fourth quarter.
For the full year, adjusted earnings were $25.13 per share, reflecting a 28.5% rise from the year-ago period. It also beat the Zacks Consensus Estimate by 5.8%.
Revenues in Detail
Revenues in the quarter under review grossed $10.70 billion, up 1.4% year over year. The top line exceeded the Zacks Consensus Estimate by 18.6%.
Thermo Fisher Scientific Inc. Price, Consensus and EPS Surprise
Thermo Fisher Scientific Inc. price-consensus-eps-surprise-chart | Thermo Fisher Scientific Inc. Quote
Total revenues for 2021 were $39.21 billion, reflecting a 21.7% rise from the year-ago period. The figure beat the Zacks Consensus Estimate by 4.6%.
Segment Details
Organic revenues in the reported quarter fell 4% year over year, while currency translation lowered revenues by 1%. Acquisitions contributed 6% to the top line and organic revenue growth from the base business grew 8%. The company generated $2.45 billion of COVID-19 response revenues (effects of COVID-19 response revenues from acquired businesses and foreign currency translation) in the reported quarter.
Thermo Fisher operates under four business segments — Life Sciences Solutions, Analytical Instruments, Specialty Diagnostics, and Laboratory Products and Biopharma Services.
Revenues at the Life Sciences Solutions segment (38.8% of total revenues) declined 4.9% year over year to $4.15 billion while Analytical Instruments Segment sales (16.1%) improved 5.4% to $1.73 billion.
Revenues at the Laboratory Products and Biopharma Services segment (39.2%) rose 16% to $4.19 billion. The Specialty Diagnostics segment (13.5%) recorded a 26.4% year-over-year fall in revenues to $1.45 billion.
Margin Analysis
Gross margin of 50.5% in the fourth quarter contracted 341 basis points (bps) year over year on a 4.9% drop in gross profits.
In the quarter, selling, general and administrative expenses increased 9.2% to $1.96 billion. Research and development expenses were $392 million, up 4.3% year over year.
Adjusted operating margin for the quarter came in at 28.5%, reflecting a contraction of 481 bps.
Financial Position
The company exited 2021 with cash and cash equivalents of $4.48 billion compared with $12.03 billion at the end of the third quarter.
Cumulative net cash provided by operating activities was $9.54 billion compared with $8.29 billion a year ago.
Meanwhile, Thermo Fisher has a consistent dividend-paying history with five-year annualized dividend growth being 13.9%.
Guidance
The company stated that it will come up with its 2022 financial guidance on its earnings conference call.
Our Take
Thermo Fisher exited the fourth quarter with better-than-expected results. The robust year-over-year revenue growth across the Analytical Instruments and the Laboratory Products and Biopharma Services segments appear promising. The revenue contributions from the company’s acquisitions also instill optimism. Further, Thermo Fisher’s strategic acquisitions of PPD, Inc. and PeproTech, and accelerated investments in expanding bioproduction capacity raise investors’ confidence.
However, the year-over-year decline in fourth-quarter earnings raises apprehension. The decline in revenues at the other two segments is also disappointing. The contraction of both margins does not bode well either.
Zacks Rank and Key Picks
Thermo Fisher currently carries a Zacks Rank #3 (Hold).
Here are a few stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle.
Laboratory Corporation of America Holdings (LH - Free Report) or LabCorp has an Earnings ESP of +9.21% and a Zacks Rank of #1 (Strong Buy). LabCorp will release fourth quarter and full-year 2021 results on Feb 10. You can see the complete list of today’s Zacks #1 Rank stocks here.
LabCorp’s long-term earnings growth rate is estimated at 10.6%. LH’s earnings yield of 6.8% compares favorably with the industry’s 4.3%.
AMN Healthcare Services, Inc. (AMN - Free Report) has an Earnings ESP of +10.29% and a Zacks Rank of #1. AMN Healthcare is slated to release fourth-quarter and full-year 2021 results on Feb 17.
AMN Healthcare’s long-term earnings growth rate is estimated at 16.2%. AMN’s earnings yield of 6.5% compares favorably with the industry’s 0.9%.
Henry Schein, Inc. (HSIC - Free Report) has an Earnings ESP of +1.94% and a Zacks Rank of #2. The company will report fourth quarter and full-year 2021 results on Feb 15.
Henry Schein’s long-term earnings growth rate is estimated at 11.8%. HSIC’s earnings yield of 6.2% compares favorably with the industry’s 4.3%.