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Should You Continue to Hold TMO Stock in Your Portfolio?
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Thermo Fisher Scientific Inc.’s (TMO - Free Report) strategic buyouts and partnerships are poised to help it grow in the upcoming quarters. The company continues to prioritize its partnership with customers to drive innovation and improve patient care. Its recent string of product launches also looks highly promising. Meanwhile, declining COVID-19 revenues and adverse macroeconomic volatilities may hurt growth.
In the past year, this Zacks Rank #3 (Hold) stock has rallied 7.8% compared with the industry’s 13.1% growth and the S&P 500 composite’s 30.9% rise.
The renowned medical and laboratory equipment provider has a market capitalization of $205.49 billion. TMO’s earnings yield of 4.04% compares favorably to the industry’s -4.75%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.63%.
Find the latest earnings estimates and surprises on the Zacks Earnings Calendar.
Let’s delve deeper.
Upsides for Thermo Fisher
Strategic Acquisitions to Boost Growth: Thermo Fisher’s business strategy primarily includes expansion through the strategic acquisition of technologies and businesses that augment the company’s existing products and services. A few of its recent deals likely to drive future growth include the $3.1 billion acquisition of Olink Holdings. The acquisition, closed in the third quarter of 2024, enhances Thermo Fisher’s capabilities in the high-growth proteomics market with the addition of highly differentiated solutions. TMO acquired CorEvitas in 2023, advancing its clinical research capabilities with a leading regulatory-grade registry platform. The acquisition of MarqMetrix has added highly complementary Raman-based in-line PAT to Thermo Fisher’s portfolio.
New Partnerships Expand Business: During the third quarter of 2024, the company entered into a partnership with the National Cancer Institute for the myeloMATCH precision medicine umbrella trial within its clinical next-generation sequencing business. In the Asia Pacific region, TMO expanded its partnership with the National Battery Research Institute in Indonesia to advance battery technology and energy storage and another with the Mandaya Hospital Group in Indonesia to help advance stem cell research and cell therapy development. Thermo Fisher collaborated with Bayer AG to develop next-generation sequencing (NGS)-based companion diagnostic assays (CDx).
Image Source: Zacks Investment Research
Product Launch Impressive: Thermo Fisher’s recent slew of product launches includes the new pre-transplant risk assessment assay through CLIA laboratory. It will help assess the risk of early acute rejection in kidney transplant recipients. The company also introduced the international CorEvitas Adolescent Atopic Dermatitis (“AD”) Registry for adolescent patients. Thermo Fisher launched Scientific KingFisher PlasmidPro Maxi Processor (PlasmidPro) and Scientific One Lambda Laboratories — a new CXCL10 testing service. The company introduced the Thermo Scientific Stellar Mass Spectrometer to extend its leadership in proteomics. In the bioproduction business, the company launched a first-of-its-kind bio-based film for single-use technologies.
Headwinds for Thermo Fisher
Runoff of COVID-19 Sales Hurts Growth: Since the past few quarters, Thermo Fisher has been experiencing a continuous decline in COVID-19 testing-related demand. During the third quarter, the Life Science Solution business experienced the largest impact of the COVID-19 roll-off. Also, diagnostics and healthcare’s reported growth was adversely impacted by the runoff of COVID-19 testing-related revenues.
Macroeconomic Challenges Continue to Weigh on the Stock: The industry-wide trend of difficult macroeconomic conditions in the form of geopolitical pressure leading to disruptions in economic activity, global supply chains and labor markets is creating a challenging business environment for Thermo Fisher. Volatile financial market dynamics and significant volatility in the price and availability of goods and services are putting pressure on the company’s profitability. With sustained macroeconomic pressures, TMO may struggle to keep its operating expenses in check.
TMO Stock Estimate Trend
The Zacks Consensus Estimate for the company’s 2024 earnings per share (EPS) has moved down 1 cent to $21.68 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $42.74 billion. This suggests a 0.3% drop from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Haemonetics (HAE - Free Report) , Boston Scientific (BSX - Free Report) and Phibro Animal Health (PAHC - Free Report) .
Haemonetics has an earnings yield of 5.41% compared with the industry’s 1.75%. Haemonetics’ earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed on one occasion, the average surprise being 2.82%. Its shares have risen 1.5% compared with the industry’s 20.9% growth in the past year.
Boston Scientific, carrying a Zacks Rank #2 at present, has a long-term estimated earnings growth rate of 13.8%. Shares of the company have surged 65.7% compared with the industry’s 21% growth. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.29%.
Phibro Animal Health, carrying a Zacks Rank #2 at present, has an estimated earnings growth rate of 35.3% for fiscal 2025 compared with the industry’s 11.1%. Shares of the company have surged 81.2% compared with the industry’s 14.5% growth over the past year. PAHC’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 25.47%.
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Should You Continue to Hold TMO Stock in Your Portfolio?
Thermo Fisher Scientific Inc.’s (TMO - Free Report) strategic buyouts and partnerships are poised to help it grow in the upcoming quarters. The company continues to prioritize its partnership with customers to drive innovation and improve patient care. Its recent string of product launches also looks highly promising. Meanwhile, declining COVID-19 revenues and adverse macroeconomic volatilities may hurt growth.
In the past year, this Zacks Rank #3 (Hold) stock has rallied 7.8% compared with the industry’s 13.1% growth and the S&P 500 composite’s 30.9% rise.
The renowned medical and laboratory equipment provider has a market capitalization of $205.49 billion. TMO’s earnings yield of 4.04% compares favorably to the industry’s -4.75%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.63%.
Find the latest earnings estimates and surprises on the Zacks Earnings Calendar.
Let’s delve deeper.
Upsides for Thermo Fisher
Strategic Acquisitions to Boost Growth: Thermo Fisher’s business strategy primarily includes expansion through the strategic acquisition of technologies and businesses that augment the company’s existing products and services. A few of its recent deals likely to drive future growth include the $3.1 billion acquisition of Olink Holdings. The acquisition, closed in the third quarter of 2024, enhances Thermo Fisher’s capabilities in the high-growth proteomics market with the addition of highly differentiated solutions. TMO acquired CorEvitas in 2023, advancing its clinical research capabilities with a leading regulatory-grade registry platform. The acquisition of MarqMetrix has added highly complementary Raman-based in-line PAT to Thermo Fisher’s portfolio.
New Partnerships Expand Business: During the third quarter of 2024, the company entered into a partnership with the National Cancer Institute for the myeloMATCH precision medicine umbrella trial within its clinical next-generation sequencing business. In the Asia Pacific region, TMO expanded its partnership with the National Battery Research Institute in Indonesia to advance battery technology and energy storage and another with the Mandaya Hospital Group in Indonesia to help advance stem cell research and cell therapy development. Thermo Fisher collaborated with Bayer AG to develop next-generation sequencing (NGS)-based companion diagnostic assays (CDx).
Image Source: Zacks Investment Research
Product Launch Impressive: Thermo Fisher’s recent slew of product launches includes the new pre-transplant risk assessment assay through CLIA laboratory. It will help assess the risk of early acute rejection in kidney transplant recipients. The company also introduced the international CorEvitas Adolescent Atopic Dermatitis (“AD”) Registry for adolescent patients. Thermo Fisher launched Scientific KingFisher PlasmidPro Maxi Processor (PlasmidPro) and Scientific One Lambda Laboratories — a new CXCL10 testing service. The company introduced the Thermo Scientific Stellar Mass Spectrometer to extend its leadership in proteomics. In the bioproduction business, the company launched a first-of-its-kind bio-based film for single-use technologies.
Headwinds for Thermo Fisher
Runoff of COVID-19 Sales Hurts Growth: Since the past few quarters, Thermo Fisher has been experiencing a continuous decline in COVID-19 testing-related demand. During the third quarter, the Life Science Solution business experienced the largest impact of the COVID-19 roll-off. Also, diagnostics and healthcare’s reported growth was adversely impacted by the runoff of COVID-19 testing-related revenues.
Macroeconomic Challenges Continue to Weigh on the Stock: The industry-wide trend of difficult macroeconomic conditions in the form of geopolitical pressure leading to disruptions in economic activity, global supply chains and labor markets is creating a challenging business environment for Thermo Fisher. Volatile financial market dynamics and significant volatility in the price and availability of goods and services are putting pressure on the company’s profitability. With sustained macroeconomic pressures, TMO may struggle to keep its operating expenses in check.
TMO Stock Estimate Trend
The Zacks Consensus Estimate for the company’s 2024 earnings per share (EPS) has moved down 1 cent to $21.68 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $42.74 billion. This suggests a 0.3% drop from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Haemonetics (HAE - Free Report) , Boston Scientific (BSX - Free Report) and Phibro Animal Health (PAHC - Free Report) .
Haemonetics has an earnings yield of 5.41% compared with the industry’s 1.75%. Haemonetics’ earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed on one occasion, the average surprise being 2.82%. Its shares have risen 1.5% compared with the industry’s 20.9% growth in the past year.
HAE carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Boston Scientific, carrying a Zacks Rank #2 at present, has a long-term estimated earnings growth rate of 13.8%. Shares of the company have surged 65.7% compared with the industry’s 21% growth. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.29%.
Phibro Animal Health, carrying a Zacks Rank #2 at present, has an estimated earnings growth rate of 35.3% for fiscal 2025 compared with the industry’s 11.1%. Shares of the company have surged 81.2% compared with the industry’s 14.5% growth over the past year. PAHC’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 25.47%.