Core Insights - Thermo Fisher Scientific (TMO) is positioned as a leading player in the healthcare diagnostics and research sector, with a robust business model that emphasizes consumables and advanced precision medicine [24][25][35] - The company reported a slight decline in total revenue of 1% but achieved core organic revenue growth slightly ahead of expectations, indicating resilience in its core business [19][30] - Despite a high valuation post-pandemic, TMO's historical performance and strategic investments suggest potential for elevated returns in the long term [24][26] Financial Performance - TMO has demonstrated impressive revenue growth of 13% annually over the past decade, with adjusted EPS and free cash flow compounding at 15% and 14% per year, respectively [25][36] - The company expects full-year revenue in the range of $42.4 billion to $43.3 billion and adjusted EPS between $21.29 and $22.07, reflecting optimism about future growth [35] - In Q2 2024, TMO reported an adjusted EPS growth rate of 4% to $5.37, showcasing its ability to maintain profitability despite market challenges [30][34] Market Position and Strategy - TMO's business model is characterized by over 80% of sales coming from consumables, primarily in developed markets, which positions it as a critical player in global healthcare [25][27] - The company is investing aggressively in R&D, spending approximately $340 million in Q2 2024, which is 7.1% of its manufacturing revenue, to remain competitive and drive innovation [33][34] - Recent acquisitions, such as the $3.1 billion deal for Olink, enhance TMO's capabilities in proteomics and support its growth strategy in advanced biopharmaceutical research [35][36] Growth Drivers - TMO's core growth is driven by strong performance in segments like Analytical Instruments and Specialty Diagnostics, with notable increases in transplant diagnostics and immunodiagnostics [20][34] - The company is expanding its operational footprint through new facilities and partnerships, particularly in the APAC region, to capitalize on emerging market opportunities [35] - Analysts expect EPS growth to accelerate from 1% in 2024 to 12% in 2026, indicating a positive outlook for TMO's financial performance [24]

Core Viewpoint - Thermo Fisher Scientific is expected to experience near-zero revenue and earnings growth in 2024, primarily due to the decline in COVID-19 testing revenue becoming immaterial. However, renewed funding for biotech startups and stimulus measures in China may help revive growth in the short term. The long-term growth thesis remains intact, driven by increasing demand in healthcare, semiconductor, and battery manufacturing sectors. The stock price is near the fair value estimate, leading to a downgrade to Hold despite the company's strong fundamentals [9][19]. Financial Performance - The organic sales growth rates for Thermo Fisher have shown a declining trend, with 1Q23 at -8% and 2Q24 at -1%. The company has experienced varying growth across its segments, with Life Sciences and Specialty Diagnostics showing improvement, while Analytical Instruments and Lab Products and Services have bottomed out [2][21]. - The 2024 guidance indicates a sales outlook of $43.4-$44.3 billion, reflecting only a 0.1% increase at the midpoint. EPS guidance has been raised to $21.29-$22.07, up just 0.5% [10]. Growth Drivers - China is emerging as a growth driver, with a government focus on "High-Quality Growth" and a year-long program to stimulate consumption and investment. This is expected to positively impact Thermo's sales in 2025, with reported sales growth in China at "mid-single digits" in 2Q 2024 [3][14]. - The pace of new clinical trial authorizations has increased significantly, with 25,572 new trials registered in 2024 through July, indicating a potential boost in demand for Thermo's products and services [15]. Acquisition and Debt Management - The acquisition of Olink for $3.1 billion has closed, expected to contribute $200 million in sales in 2024. Olink's focus on proteomics aligns with Thermo's existing product offerings, creating potential synergies [14][25]. - Thermo Fisher's debt profile remains stable, with a debt/EBITDA leverage of 3.3x gross and 2.5x net. The company ended the quarter with $8.8 billion in cash and investments, although $3.1 billion has been allocated for the Olink acquisition [12][18]. Valuation - The DCF valuation for Thermo Fisher is $577.58 per share, reflecting a slight decrease from the previous quarter. The stock is currently trading at a P/E of 26.3, which is at the high end for a company with an EPS growth rate of around 13% [7][19].

Thermo Fisher Scientific Inc.'s (TMO) second-quarter 2024 adjusted earnings per share (EPS) of $5.37 topped the Zacks Consensus Estimate by 4.9%. The figure also rose 4.3% year over year. GAAP EPS was $4.04, up 15.1% on a year-over-year basis. Segment Details Revenues in the Life Sciences Solutions segment (22.3% of total revenues) declined 4.4% year over year to $2.36 billion, while Analytical Instruments Segment sales (16.9%) rose 1.9% to $1.78 billion. Our model projected revenues of $2.26 billion for th ...

Financial Data and Key Metrics Changes - Revenue for the quarter was $10.54 billion, with adjusted operating income at $2.35 billion and an adjusted operating margin of 22.3% [17][76] - Adjusted EPS increased by 4% year-over-year to $5.37 per share, while GAAP EPS was $4.04, up 15% from the previous year [27][76] - Year-to-date free cash flow was 68% higher than the same period last year, totaling $2.6 billion after $630 million in net capital expenditures [13][51] Business Line Data and Key Metrics Changes - Life Sciences Solutions segment reported a 4% decline in revenue, with organic revenue down 3% year-over-year, despite growth in the biosciences business [30] - Specialty Diagnostics saw both reported and organic revenue increase by 1%, driven by strong growth in transplant diagnostics and immunodiagnostics [31] - Laboratory Products and Biopharma Services segment experienced a 1% decrease in both reported and organic revenue, primarily due to the runoff of vaccines and therapies revenue [79] Market Data and Key Metrics Changes - North America experienced a mid-single-digit decline, while Europe and Asia Pacific grew in the low to mid-single digits [28] - The company noted a 3% headwind to organic revenue growth due to pandemic-related revenue, primarily from vaccines and therapies [49] Company Strategy and Development Direction - The company is focused on high-impact innovation, maintaining trusted partner status with customers, and leveraging its commercial engine to drive growth [41][45] - Recent product launches include the Thermo Scientific Stellar Mass Spectrometer and new build-for-purpose editions of the Thermo Scientific Orbitrap Ascend Tribrid Mass Spectrometer [19][42] - The company is advancing its corporate social responsibility goals, including achieving zero waste certification for 30 manufacturing and warehouse sites by 2025 [12][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver differentiated performance in 2024, raising revenue guidance to a range of $42.4 billion to $43.3 billion [8][53] - The management team highlighted strong execution and customer relationships as key drivers of success, with expectations for gradual market recovery [72][95] - The company anticipates that the market will continue to improve modestly in the latter half of the year, with a focus on long-term growth [84][110] Other Important Information - The company completed the acquisition of Olink, enhancing its capabilities in next-generation proteomic solutions [46] - Adjusted SG&A expenses were 16.6% of revenue, and total R&D expenses were $340 million, reflecting ongoing investments in innovation [29] Q&A Session Summary Question: Market expectations for 2025 - Management expressed confidence in the long-term market growth of 4% to 6%, with expectations for gradual improvement in 2024 and 2025 [58][72] Question: Performance of Life Sciences Solutions segment - The biosciences business showed growth, with positive developments in bioproduction and clinical sequencing [62][86] Question: China market growth - China grew mid-single-digits, with management noting that stimulus funding is being utilized effectively [85][91] Question: Clinical research business performance - The clinical research segment outperformed, delivering positive organic revenue growth despite headwinds from vaccine-related activities [92] Question: Margin outlook for lab products - Management indicated that margins could expand as volumes recover and cost bases are adjusted [98][114]

The reported revenue represents a surprise of +0.29% over the Zacks Consensus Estimate of $10.51 billion. With the consensus EPS estimate being $5.13, the EPS surprise was +4.68%. Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance. Revenue Growth - Organic: -1% compared to the -1.6% average estimate based on five analysts. Revenues- Labo ...

Core Insights - Thermo Fisher Scientific (TMO) reported better-than-expected second-quarter earnings and raised its full-year projections [1][5] - The company experienced a 14% year-over-year increase in net income to $1.55 billion, surpassing analysts' expectations of $1.41 billion [1][2] - Revenue slightly decreased by 1% to $10.54 billion, but still exceeded the projected $10.52 billion [2][5] Financial Guidance - Analysts project full-year revenue around $42.95 billion and adjusted EPS of $21.70, both within Thermo Fisher's updated guidance ranges [4] - The company has adjusted its full-year revenue projection to a range of $42.4 billion to $43.3 billion, raising the lower end from the previous range of $42.3 billion to $43.3 billion [8] - Adjusted EPS projections have also been increased to a range of $21.29 to $22.07 per share, compared to the previous guidance of $21.14 to $22.02 per share [8] Market Reaction - Despite the earnings beat and raised guidance, Thermo Fisher shares fell by 1.7% to $543.00 in premarket trading [5][7] - The company had previously issued warnings about a potentially lower sales outlook at the beginning of the year, making the solid Q2 results significant [6]

Revenue Performance - Second quarter revenue declined 1% to $10.54 billion in 2024, compared to $10.69 billion in 2023[5] - Revenues for the three months ended June 29, 2024, were $10,541 million, a slight decrease from $10,687 million in the same period last year[21] - Revenues for the six months ended July 1, 2023, were $21.397 billion, representing a decrease from $20.886 billion in the same period in 2024[23] - Life Sciences Solutions segment revenue decreased to $2,355 million (22.3% of total revenue) in Q2 2024 from $2,463 million (23.0% of total revenue) in Q2 2023[38] - Laboratory Products and Biopharma Services segment revenue was $5,758 million (54.6% of total revenue) in Q2 2024, down from $5,831 million (54.6% of total revenue) in Q2 2023[38] Earnings and Profitability - GAAP diluted EPS increased 15% to $4.04 in Q2 2024, compared to $3.51 in Q2 2023[16] - Adjusted EPS increased 4% to $5.37 in Q2 2024[13] - GAAP operating income grew to $1.82 billion in Q2 2024, compared to $1.58 billion in Q2 2023[16] - GAAP operating margin increased to 17.3% in Q2 2024, compared to 14.8% in Q2 2023[16] - Net income attributable to Thermo Fisher Scientific Inc. rose to $1,548 million (14.7% of revenues) from $1,361 million (12.7% of revenues)[21] - Adjusted operating income (non-GAAP) was $2,347 million (22.3% of revenues), compared to $2,370 million (22.2% of revenues) in the prior year[21] - Adjusted EPS (non-GAAP) increased to $5.37 from $5.15 year-over-year[21] - Adjusted EPS in Q2 2024 increased 4% to $5.37 compared to $5.15 in Q2 2023[33] - Adjusted operating income for Q2 2024 was $2.35 billion, slightly down from $2.37 billion in Q2 2023[33] - Adjusted operating margin improved to 22.3% in Q2 2024 from 22.2% in Q2 2023[33] - Net income attributable to Thermo Fisher Scientific Inc. for the six months ended July 1, 2023, was $2.650 billion, compared to $2.875 billion in 2024[23] - Adjusted operating income (non-GAAP measure) for the six months ended July 1, 2023, was $4.700 billion, slightly higher than $4.625 billion in 2024[23] - Adjusted EPS (non-GAAP measure) for the six months ended July 1, 2023, was $10.18, compared to $10.47 in 2024[23] Guidance and Forecast - Thermo Fisher raised its full-year revenue guidance to a new range of $42.4 to $43.3 billion[6] - Adjusted EPS guidance for the full year was raised to a new range of $21.29 to $22.07[6] Acquisitions and Product Launches - The company completed the acquisition of Olink, a provider of next-generation proteomic solutions[4] - Thermo Fisher launched several new products, including the Thermo Scientific™ Stellar™ mass spectrometer and ENERGY STAR-certified ULT Freezers[3] Geographic Expansion - The company expanded its presence in Indonesia to support healthcare, scientific research, and renewable energy investments[14] Cash Flow and Financial Position - Free cash flow (non-GAAP) improved to $1,674 million from $1,260 million in the same period last year[21] - Free cash flow (non-GAAP measure) for the six months ended July 1, 2023, was $1.537 billion, lower than $2.583 billion in 2024[23] - Free cash flow (non-GAAP measure) increased to $2,583 million from $1,537 million[27] - Net cash provided by operating activities for the six months ended June 29, 2024, was $3,211 million, up from $2,269 million in the same period of 2023[43] - Cash, cash equivalents, and restricted cash decreased to $7,097 million at the end of June 2024 from $8,097 million at the beginning of the period[43] Costs and Expenses - Cost of revenues decreased to 57.9% of revenues from 59.2% in the prior year[21] - Research and development expenses remained stable at 3.2% of revenues[21] - Consolidated depreciation expense for 2024 was $562 million, compared to $523 million in 2023[25] - Adjusted results in 2024 and 2023 exclude charges for inventory write-downs and accelerated depreciation on manufacturing assets[24] - Adjusted results in 2024 and 2023 exclude restructuring and other costs, including severance and impairments of long-lived assets[24] Non-GAAP Measures - The company excludes acquisition-related costs and restructuring expenses from non-GAAP measures as they are not indicative of normal operating costs[44][45] - Free cash flow is reported as operating cash flow excluding net capital expenditures, indicating the company's ability to generate cash for acquisitions and other activities[46] - Non-GAAP financial measures are not considered superior to GAAP measures, with reconciliations provided in the press release[47] COVID-19 Impact - COVID-19 testing revenue declined by 1% year-over-year[22] Organic Growth - Organic revenue growth (non-GAAP) was -1%, with core organic revenue growth (non-GAAP) at 0% for the three months ended June 29, 2024[22] Balance Sheet - Total current assets as of June 29, 2024, were $25.476 billion, up from $24.589 billion as of December 31, 2023[26] - Total liabilities, redeemable noncontrolling interest, and equity as of June 29, 2024, were $98.496 billion, slightly down from $98.726 billion as of December 31, 2023[26] Company Outlook - The company has made significant progress and is well-positioned for differentiated performance in 2024[49]

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The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on July 24. On the other hand, if they miss, the stock may move lower. Revenues are expected to be $10.51 billion, down 1.7% from the year-ago quarter. Wall Street expects a year-over-year decline in earnings on lower revenues when Thermo Fisher Scientific (TMO) reports results for the quarter ended June 2024. While this widely-known consensus outlook is important in gauging th ...

Thermo Fisher Scientific Inc. (TMO) is slated to release second-quarter 2024 results on Jul 24, before market open. Thermo Fisher's first-quarter earnings of $5.11 per share beat the Zacks Consensus Estimate by 8.7%. Its earnings missed estimates in one of the trailing four quarters and beat in the other three, the average surprise being 1.52%. Q2 Estimates The Zacks Consensus Estimate for second-quarter revenues is pegged at $10.51 billion, suggesting a 1.6% decline from the prior-year quarter's reported f ...