Public Companies

Earnings Report: Thermo Fisher Scientific Inc. Missed Revenue Estimates By 8.4%

It's been a good week for Thermo Fisher Scientific Inc. (NYSE:TMO) shareholders, because the company has just released its latest full-year results, and the shares gained 2.1% to US$519. Thermo Fisher Scientific missed revenue estimates by 8.4%, with sales of US$28b, although statutory earnings per share (EPS) of US$15.96 beat expectations, coming in 3.6% ahead of analyst estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year. earnings-and-revenue-growthNYSE:TMO Earnings and Revenue Growth February 3rd 2021

Following the latest results, Thermo Fisher Scientific's 16 analysts are now forecasting revenues of US$35.2b in 2021. This would be a huge 23% improvement in sales compared to the last 12 months. Per-share earnings are expected to bounce 45% to US$17.86. In the lead-up to this report, the analysts had been modelling revenues of US$33.7b and earnings per share (EPS) of US$16.65 in 2021. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

It will come as no surprise to learn that the analysts have increased their price target for Thermo Fisher Scientific 5.7% to US$558on the back of these upgrades. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Thermo Fisher Scientific analyst has a price target of US$620 per share, while the most pessimistic values it at US$384. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Thermo Fisher Scientific shareholders.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Thermo Fisher Scientific's rate of growth is expected to accelerate meaningfully, with the forecast 23% revenue growth noticeably faster than its historical growth of 11%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 9.6% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Thermo Fisher Scientific is expected to grow much faster than its industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Thermo Fisher Scientific following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Thermo Fisher Scientific analysts - going out to 2025, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for Thermo Fisher Scientific that we have uncovered.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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