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Thermo Fisher (TMO) Q1 Earnings Beat Estimates, Margins Down
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Thermo Fisher Scientific Inc.'s (TMO - Free Report) first-quarter 2023 adjusted earnings per share (EPS) of $5.03 beat the Zacks Consensus Estimate by 1.6%. However, the figure declined 30.6% year over year.
The adjusted number excludes certain non-recurring expenses, including asset amortization costs and certain restructuring costs.
GAAP EPS was $3.32, down 40.8% on a year-over-year basis.
Revenues in Detail
Revenues in the quarter under review grossed $10.71 billion, down 9.4% year over year. The top line exceeded the Zacks Consensus Estimate by 1.3%.
Segment Details
Organic revenues in the reported quarter declined 8% year over year, while currency translation lowered revenues by 2%. Core organic revenue growth (excluding the impacts of COVID-19 testing revenue) was 6%.
Thermo Fisher operates under four business segments — Life Sciences Solutions, Analytical Instruments, Specialty Diagnostics and Laboratory Products and Biopharma Services.
Revenues in the Life Sciences Solutions segment (24.4% of total revenues) declined 38.3% year over year to $2.61 billion, while Analytical Instruments Segment sales (16.1%) increased 13.5% to $1.72 billion.
Revenues in the Laboratory Products and Biopharma Services segment (53.8%) rose 5.9% to $5.76 billion. The Specialty Diagnostics segment (10.3%) recorded a 25.2% year-over-year fall in revenues to $1.10 billion.
Margin Analysis
The gross margin of 39.9% in the first quarter contracted 752 basis points (bps) year over year on a 3.6% rise in the cost of revenues.
In the quarter, selling, general and administrative expenses fell 8.9% to $1.65 billion. Research and development expenses declined 4.9% to $346 million.
The adjusted operating margin for the quarter came in at 21.3%, reflecting a contraction of 774 bps.
Financial Position
The company exited first quarter 2023 with cash and cash equivalents of $3.48 billion compared with $8.52 billion at the end of fourth quarter 2022.
Thermo Fisher Scientific Inc. Price, Consensus and EPS Surprise
Cumulative net cash provided by operating activities was $729 million compared with $2.20 billion a year ago.
Thermo Fisher has a consistent dividend-paying history, with the five-year annualized dividend growth being 15.9%.
Guidance
Thermo Fisher will provide an update to its 2023 financial guidance during Q1 conference call.
Our Take
Thermo Fisher exited the first quarter of 2023 with better-than-expected results. The robust year-over-year revenue growth in the Analytical Instruments and the Laboratory Products and Biopharma Services segments appears promising. During the first quarter, Thermo Fisher launched a range of high-impact, advanced new products, including the Thermo Scientific iCAP RQ Plus ICP-MS Analyzer to simplify analysis of trace elements. The company continued to strengthen its unique customer value proposition by advancing the strategic partnership with the University of California, San Francisco (UCSF), with the opening of a new cell therapy cGMP manufacturing and collaboration center to boost the development of breakthrough therapies.
The year-over-year decline in revenues in the Life Science Solutions and Specialty Diagnostics segment is disappointing. The contraction of both margins, due to escalating costs and expenses, does not bode well either. The year-over-year decline in adjusted earnings is concerning
Zacks Rank and Upcoming Releases
Thermo Fisher currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader medical space are Bio-Rad Laboratories (BIO - Free Report) ,Henry Schein, Inc. (HSIC - Free Report) and Avanos Medical, Inc. (AVNS - Free Report)
Bio-Rad Laboratories, carrying a Zacks Rank of 2 (Buy), is expected to release first quarter 2023 earnings on May 4. BIO has an earnings yield of 3.3%, which compares favorably with the industry’s negative yield of 2.9%.
BioRad Laboratories’ earnings surpassed estimates in three of the trailing four quarters and missed the same once, the average surprise being 27.54%.
Henry Schein, carrying a Zacks Rank #2, is expected to release first quarter 2023 earnings on May 2. HSIC has an estimated long-term growth rate of 8.1%. HSIC’s earnings surpassed estimates in three of the trailing four quarters and matched the same in the other, the average beat being 2.9%.
Henry Schein has gained 22.2% compared with the industry’s 19.7% rise in the past six months.
Avanos, carrying a Zacks Rank #2, is expected to release first quarter 2023 earnings on May 3. AVNS has an estimated growth rate of 1.8% for 2023. AVNS’ earnings surpassed estimates in all the trailing four quarters, the average beat being 11%.
Avanos has gained 46.3% compared with the industry’s 17.5% rise in the past six months.
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Thermo Fisher (TMO) Q1 Earnings Beat Estimates, Margins Down
Thermo Fisher Scientific Inc.'s (TMO - Free Report) first-quarter 2023 adjusted earnings per share (EPS) of $5.03 beat the Zacks Consensus Estimate by 1.6%. However, the figure declined 30.6% year over year.
The adjusted number excludes certain non-recurring expenses, including asset amortization costs and certain restructuring costs.
GAAP EPS was $3.32, down 40.8% on a year-over-year basis.
Revenues in Detail
Revenues in the quarter under review grossed $10.71 billion, down 9.4% year over year. The top line exceeded the Zacks Consensus Estimate by 1.3%.
Segment Details
Organic revenues in the reported quarter declined 8% year over year, while currency translation lowered revenues by 2%. Core organic revenue growth (excluding the impacts of COVID-19 testing revenue) was 6%.
Thermo Fisher operates under four business segments — Life Sciences Solutions, Analytical Instruments, Specialty Diagnostics and Laboratory Products and Biopharma Services.
Revenues in the Life Sciences Solutions segment (24.4% of total revenues) declined 38.3% year over year to $2.61 billion, while Analytical Instruments Segment sales (16.1%) increased 13.5% to $1.72 billion.
Revenues in the Laboratory Products and Biopharma Services segment (53.8%) rose 5.9% to $5.76 billion. The Specialty Diagnostics segment (10.3%) recorded a 25.2% year-over-year fall in revenues to $1.10 billion.
Margin Analysis
The gross margin of 39.9% in the first quarter contracted 752 basis points (bps) year over year on a 3.6% rise in the cost of revenues.
In the quarter, selling, general and administrative expenses fell 8.9% to $1.65 billion. Research and development expenses declined 4.9% to $346 million.
The adjusted operating margin for the quarter came in at 21.3%, reflecting a contraction of 774 bps.
Financial Position
The company exited first quarter 2023 with cash and cash equivalents of $3.48 billion compared with $8.52 billion at the end of fourth quarter 2022.
Thermo Fisher Scientific Inc. Price, Consensus and EPS Surprise
Thermo Fisher Scientific Inc. price-consensus-eps-surprise-chart | Thermo Fisher Scientific Inc. Quote
Cumulative net cash provided by operating activities was $729 million compared with $2.20 billion a year ago.
Thermo Fisher has a consistent dividend-paying history, with the five-year annualized dividend growth being 15.9%.
Guidance
Thermo Fisher will provide an update to its 2023 financial guidance during Q1 conference call.
Our Take
Thermo Fisher exited the first quarter of 2023 with better-than-expected results. The robust year-over-year revenue growth in the Analytical Instruments and the Laboratory Products and Biopharma Services segments appears promising. During the first quarter, Thermo Fisher launched a range of high-impact, advanced new products, including the Thermo Scientific iCAP RQ Plus ICP-MS Analyzer to simplify analysis of trace elements. The company continued to strengthen its unique customer value proposition by advancing the strategic partnership with the University of California, San Francisco (UCSF), with the opening of a new cell therapy cGMP manufacturing and collaboration center to boost the development of breakthrough therapies.
The year-over-year decline in revenues in the Life Science Solutions and Specialty Diagnostics segment is disappointing. The contraction of both margins, due to escalating costs and expenses, does not bode well either. The year-over-year decline in adjusted earnings is concerning
Zacks Rank and Upcoming Releases
Thermo Fisher currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader medical space are Bio-Rad Laboratories (BIO - Free Report) ,Henry Schein, Inc. (HSIC - Free Report) and Avanos Medical, Inc. (AVNS - Free Report)
Bio-Rad Laboratories, carrying a Zacks Rank of 2 (Buy), is expected to release first quarter 2023 earnings on May 4. BIO has an earnings yield of 3.3%, which compares favorably with the industry’s negative yield of 2.9%.
BioRad Laboratories’ earnings surpassed estimates in three of the trailing four quarters and missed the same once, the average surprise being 27.54%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Henry Schein, carrying a Zacks Rank #2, is expected to release first quarter 2023 earnings on May 2. HSIC has an estimated long-term growth rate of 8.1%. HSIC’s earnings surpassed estimates in three of the trailing four quarters and matched the same in the other, the average beat being 2.9%.
Henry Schein has gained 22.2% compared with the industry’s 19.7% rise in the past six months.
Avanos, carrying a Zacks Rank #2, is expected to release first quarter 2023 earnings on May 3. AVNS has an estimated growth rate of 1.8% for 2023. AVNS’ earnings surpassed estimates in all the trailing four quarters, the average beat being 11%.
Avanos has gained 46.3% compared with the industry’s 17.5% rise in the past six months.