Thermo Fisher Scientific, Inc.
) is expected to release its second-quarter 2014 results before the
opening bell on Jul 23. Last quarter, Thermo Fisher had posted a
positive earnings surprise of 8.51%. The four-quarter trailing
average beat is pegged at 3.81%. Let's see how things are shaping
up for this announcement.
Factors at Play
Having successfully completed the Life Technologies acquisition
in February, Thermo Fisher posted a better-than-expected
first-quarter 2014 with adjusted earnings per share of $1.53 and
revenues of $3.90 billion, both ahead of the respective Zacks
Consensus Estimate of $1.40 and $3.72 billion. The results also
sailed past the year-ago numbers.
According to the company, the takeover has led to the emergence
of an unrivaled market leader serving research, Specialty
Diagnostics and applied markets. Thermo Fisher also expects this
acquisition to help expand its commercial infrastructure and global
presence. The company is currently working on the growth
opportunities in Asia Pacific and emerging markets. Given the huge
potential in the region and the high growth rate in China, Thermo
Fisher is likely to exceed its goal of garnering 25% revenues from
the high-growth Asia-Pacific region and emerging markets by
Taking into consideration the Life Technologies acquisition and
related divestitures, in the last reported quarter, Thermo Fisher
had raised its fiscal 2014 guidance. Adjusted EPS for the year is
expected in the range of $6.80 to $6.95 (implying annualized growth
of 25% to 28%), up from the earlier announced range of $6.70 to
$6.90 (24% to 27%). The company also expects 2014 revenues in the
range of $16.84 to $17.00 billion (annualized growth of 29% to 30%)
compared with the earlier band of $16.63 billion to $16.83 billion
(growth of 27% to 29% over 2013).
However, for the second quarter, Thermo Fisher had earlier
assumed to post an EPS lower than the street number. This,
according to the company, is because of some seasonal impact in the
said quarter as salary increases have been affected during the
period. This may have an impact on the quarterly bottom line.
Our proven model does not conclusively show that Thermo Fisher
is likely to beat earnings this quarter. This is because a stock
needs to have both a positive
(Expected Surprise Prediction) and a Zacks Rank #1, 2 or 3 for this
to happen. That is not the case here as you will see below.
Thermo Fisher's Earnings ESP is 0.00%, since the Most Accurate
estimate of $1.62 is on par with the Zacks Consensus Estimate.
Thermo Fisher's Zacks Rank #4 (Sell) when combined with an ESP of
0.00% makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing a negative estimate revision momentum.
Other Stocks to Consider
Here are some other companies you may want to consider as our
model shows they have the right combination of elements to post an
earnings beat this quarter:
) has an earnings ESP of +1.79% and holds a Zacks Rank #2 (Buy).
Hospira is expected to report its second-quarter 2014 earnings on
) has an earnings ESP of +31.58% and bears a Zacks Rank #3 (Hold).
Cepheid will be reporting its second-quarter earnings on Jul
Wright Medical Group Inc.
) has an earnings ESP of +2.22% and a Zacks Rank #2 (Buy). Wright
Medicalwill report second-quarter earnings on Aug 5.
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