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Thermo Fisher (TMO) Up 0.1% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Thermo Fisher Scientific (TMO - Free Report) . Shares have added about 0.1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Thermo Fisher due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Thermo Fisher reported better-than-expected performance in second-quarter 2018. Adjusted earnings per share (EPS) came in at $2.75, beating the Zacks Consensus Estimate by 4.6% and the year-ago quarterly figure by 19.6%. On a reported basis, the EPS of $1.85 marked an 18.6% increase year over year.
Revenues in the quarter under review logged $6.08 billion, up 21.8% year over year. The top line also outpaced the Zacks Consensus Estimate of $5.92 billion.
Quarter in Detail
Organic revenues in the reported quarter grew 8% year over year while acquisitions drove revenues by 12%. Currency translation positively influenced total revenues by 2%.
Thermo Fisher operates under four business segments: Life Sciences Solutions, Analytical Instruments, Specialty Diagnostics and Laboratory Products and Services.
Revenues at the Life Sciences Solutions segment (25.8% of total revenues) improved 12% year over year to $1.57 billion while Analytical Instruments Segment sales (21.5%) rose 13% to $1.31 billion.
Revenues at the Laboratory Products and Services segment (41.9%) surged 42% to $2.55 billion, banking on the buyout of Patheon in last August. The Specialty Diagnostics segment (15.2%) recorded an 8% rise to $0.93 billion.
Gross margin of 47.2% during the second quarter was down 117 basis points (bps) year over year despite an 18.9% improvement in gross profits. Adjusted operating margin contracted 11 bps to 22.9% despite a 21.2% rise in operating profit.
The company exited the second quarter of 2018 with cash and cash equivalents of $937 million compared with $950 million at the end of the first quarter. As of Jun 30, 2018, net cash provided by operating activities was $1.52 billion compared with $1.21 billion in the year-ago period.
2018 Guidance
Based on a solid first-half operational performance and a more favorable foreign exchange environment, Thermo Fisher has raised its earnings projection and the lower-end of its 2018 revenue outlook. Revenues are expected in the range of $23.68-$23.86 billion (compared with the company's earlier predicted band of $23.62-$23.86 billion), enhancing 13-14% revenue growth from the year-ago period. The Zacks Consensus Estimate of $23.76 billion remains within the guided range.
Adjusted EPS view has been lifted to a new band of $10.89-$11.01 (compared with the previous forecast of $10.80-$10.96), reflecting 15-16% growth from the year-earlier period. The Zacks Consensus Estimate of $10.90 per share falls within but near the lower end of the company's view.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Thermo Fisher has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for growth and momentum investors while value investors may want to look elsewhere.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Thermo Fisher has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Thermo Fisher (TMO) Up 0.1% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Thermo Fisher Scientific (TMO - Free Report) . Shares have added about 0.1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Thermo Fisher due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Thermo Fisher reported better-than-expected performance in second-quarter 2018. Adjusted earnings per share (EPS) came in at $2.75, beating the Zacks Consensus Estimate by 4.6% and the year-ago quarterly figure by 19.6%. On a reported basis, the EPS of $1.85 marked an 18.6% increase year over year.
Revenues in the quarter under review logged $6.08 billion, up 21.8% year over year. The top line also outpaced the Zacks Consensus Estimate of $5.92 billion.
Quarter in Detail
Organic revenues in the reported quarter grew 8% year over year while acquisitions drove revenues by 12%. Currency translation positively influenced total revenues by 2%.
Thermo Fisher operates under four business segments: Life Sciences Solutions, Analytical Instruments, Specialty Diagnostics and Laboratory Products and Services.
Revenues at the Life Sciences Solutions segment (25.8% of total revenues) improved 12% year over year to $1.57 billion while Analytical Instruments Segment sales (21.5%) rose 13% to $1.31 billion.
Revenues at the Laboratory Products and Services segment (41.9%) surged 42% to $2.55 billion, banking on the buyout of Patheon in last August. The Specialty Diagnostics segment (15.2%) recorded an 8% rise to $0.93 billion.
Gross margin of 47.2% during the second quarter was down 117 basis points (bps) year over year despite an 18.9% improvement in gross profits. Adjusted operating margin contracted 11 bps to 22.9% despite a 21.2% rise in operating profit.
The company exited the second quarter of 2018 with cash and cash equivalents of $937 million compared with $950 million at the end of the first quarter. As of Jun 30, 2018, net cash provided by operating activities was $1.52 billion compared with $1.21 billion in the year-ago period.
2018 Guidance
Based on a solid first-half operational performance and a more favorable foreign exchange environment, Thermo Fisher has raised its earnings projection and the lower-end of its 2018 revenue outlook. Revenues are expected in the range of $23.68-$23.86 billion (compared with the company's earlier predicted band of $23.62-$23.86 billion), enhancing 13-14% revenue growth from the year-ago period. The Zacks Consensus Estimate of $23.76 billion remains within the guided range.
Adjusted EPS view has been lifted to a new band of $10.89-$11.01 (compared with the previous forecast of $10.80-$10.96), reflecting 15-16% growth from the year-earlier period. The Zacks Consensus Estimate of $10.90 per share falls within but near the lower end of the company's view.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Thermo Fisher has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for growth and momentum investors while value investors may want to look elsewhere.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Thermo Fisher has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.