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Thermo Fisher (TMO) to Report Q2 Earnings: What's in Store?

Thermo Fisher Scientific Inc. TMO is slated to release second-quarter 2020 results on Jul 22, before market open.

In the last reported quarter, the company’s earnings of $2.94 exceeded the Zacks Consensus Estimate by 5.4%. Its earnings surpassed estimates in each of the trailing four quarters, the average being 2.19%.

Let's discuss the factors that are likely to get reflected in the upcoming results.

Factors at Play

In the last reported quarter, Thermo Fisher’s Analytical Instruments segment performance was dull due to a significant negative impact of COVID-19. The pandemic has massively disrupted the global supply chain. Hence, given its huge international base, Thermo Fisher is once again expected to have recorded a significant fall in its quarterly Analytical Instruments revenues.

However, a number of product launches like in chromatography and mass spectrometry sub segment, and the Vanquish Core HPLC system are expected to have expanded the company’s HPLC instrument lineup, thereby contributing to the second-quarter top line. Also, the launch of Labtainer Pro BioProcess Container within its bio production business is likely to have accelerated production of new therapies and vaccines.

Thermo Fisher Scientific Inc. Price and EPS Surprise

Thermo Fisher Scientific Inc. Price and EPS Surprise

Thermo Fisher Scientific Inc. price-eps-surprise | Thermo Fisher Scientific Inc. Quote

The company’s Life-Science Solutions and Specialty Diagnostics segments are expected to have registered positive contributions, banking on COVID-19-led growing healthcare needs. Life-Science Solutions is mainly related to testing kits. With the EUA for the new COVID-19 test at the end of the first quarter, we expect it to have recorded full-quarter sales contribution. Notably, Thermo Fisher successfully attained EUA from the FDA for its diagnostic test to be used by the CLIA high-complexity laboratories in the United States.

Further, this test received the CE mark in the European Union as well. Europe, being another major spot of the virus outbreak, is anticipated to have generated strong demand for this test during the second quarter. In addition, this diagnostic test received designated approvals in Canada, Singapore, India, Australia and New Zealand. Thermo Fisher has ramped up production to meet this growing global demand. Its second-quarter results are expected to reflect these developments.

The rest of businesses within this segment are likely to have registered strong quarterly growth led by ongoing strong sales growth within genetic sciences and bio production businesses.

Within Specialty Diagnostics, the company launched the AcroMetrix COVID-19 RNA control to monitor and validate the tests. Further, in collaboration with governments, it implemented its workflow in public health labs, hospitals, and reference labs. Further, Thermo Fisher also worked to further expand testing capacity to facilitate the reopening of the economy. We expect these developments to have favorably impacted second-quarter revenues.

Within Laboratory Products and Services segment, the company is expected to have gained from strong productivity and volume leverage within the pharma services business and the research and safety market channel.

Meanwhile, the company earlier expected second-quarter organic revenues to be flat to down 15%. This expectation is based on the scale of COVID-19 related revenue tailwinds, underlying market growth and share gain activity adjusted with the scale of the COVID-19 related headwinds,.

Q2 Estimates

The Zacks Consensus Estimate for total revenues of $6.91 billion for the second quarter suggests growth of 9.4% from the prior-year quarter’s reported figure. However, the consensus mark for earnings of $2.67 per share indicates 12.2% decline from the year-ago quarter reported figure.

What Our Quantitative Model Predicts

Per our proven model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has good chances of beating estimates.

Earnings ESP: The company has an Earnings ESP of +14.37%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Thermo Fisher currently sports a Zacks Rank #1.

Other Stocks Worth a Look

Here are a few medical stocks worth considering as these also have the right combination of elements to beat on earnings this reporting cycle.

Abbott Laboratories ABT has an Earnings ESP of +10.16% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Exact Sciences Corporation EXAS has an Earnings ESP of +23.14% and a Zacks Rank of 2 at present.

Integra LifeSciences Holdings IART has an Earnings ESP of +25% and is a Zacks #2 Ranked stock.

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