雅虎香港財經 Here's Why Thermo Fisher (TMO) Should be in Your Portfolio
Thermo Fisher Scientific Inc. TMO is gaining investors’ confidence due to its impressive partnerships. Of late, the company has launched a slew of products to enhance its portfolio. Strong, stable solvency also buoys optimism. However, declining COVID-19 sales, as well as adverse macroeconomic impacts, might deter Thermo Fisher’s growth.
In the past year, this Zacks Rank #3 (Hold) stock has rallied 11.3% compared with the 8.4% rise of the industry and 25.5% growth of the S&P 500 composite.
The renowned medical and laboratory equipment provider has a market capitalization of $219.6 billion. TMO has an earnings yield of 3.8% compared to the industry’s -7.1%. The company’s earnings surpassed estimates in three of the trailing four quarters and missed in one, delivering an average surprise of 1.5%.
Let’s delve deeper.
Upsides
New Partnerships Expand Business: Thermo Fisher continues to expand business banking on strategic alliances. In March this year, the company collaborated with Bayer AG to develop next-generation sequencing (NGS)-based companion diagnostic assays (CDx). In December 2023, it announced a collaboration with Project HOPE to improve the well-being and treatment outcomes of adolescents and young persons living with HIV in Nigeria.
In addition, the company signed an exclusive deal agreement with Aesku Group to market, sell and support their portfolio of FDA-cleared IFA products, automated instruments and software in the United States. Other important acquisitions include an extended partnership with Flagship Pioneering (November 2023) and a companion diagnostic (CDx) partnership with Boehringer Ingelheim (October 2023).
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Impressive Product Launch: In April 2024, Thermo Fisher unveils its new metrology solution — the Thermo Scientific LInspector Edge In-line Mass Profilometer — to address the needs of the rapidly growing battery market. The company also introduced the TSX Universal Series ultra-low temperature (ULT) freezers with enhanced performance, user experience and energy efficiency.
A month earlier, it launched a new CorEvitas syndicated clinical registry in generalized pustular psoriasis (GPP). In December 2023, the company launched CorEvidence, its proprietary cloud-based data lake platform, optimizing pharmacovigilance case processing and safety data management processes. In recent years, the company has gradually ramped up investments in R&D.
Stable Solvency: Thermo Fisher ended the first quarter of 2024 with no debt on its balance sheet, which looks promising. The company had cash and cash equivalents of $5.49 billion in the first quarter of 2024 compared with $8.08 billion at the end of the fourth quarter of 2023.
Downsides
Macroeconomic Challenges Continue to Weigh on the Stock: The challenging macroeconomic scenario and slower economic recovery in China continue to hurt Thermo Fisher's growth. The company has been witnessing headwinds in the government and academic markets. Moreover, many countries in Europe are also going through a tough time that might impact their academic budgets. Thermo Fisher remains cautious since growth could further moderate if the economic scenario worsens.
Lower COVID-19 Sales Hurt Growth: During the COVID-19 pandemic, Thermo Fisher’s biosciences and bioproduction businesses expanded their capacity to meet the global vaccine manufacturing requirements of pharma and biotech customers. However, in recent quarters, the demand for COVID-19 testing declined, leading to a high-single-digit drop in diagnostics and healthcare revenues.
Estimate Trend
The Zacks Consensus Estimate for 2024 earnings per share (EPS) has moved to $21.65 from $21.64 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $42.94 billion. This suggests a 0.2% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Hims & Hers Health HIMS, Medpace MEDP and ResMed RMD.
Hims & Hers Health’s earnings are expected to surge 263.6% in 2024 compared with the industry’s 17.8%. HIMS’ earnings surpassed estimates in three of the trailing four quarters and missed in one, delivering an average surprise of 79.2%. Its shares have surged 135.5% against the industry’s 28.1% decline in the past year.
HIMS sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Medpace, also sporting a Zacks Rank #1 at present, has an estimated 2024 earnings growth rate of 27.1% compared with the industry’s 13.8%. Shares of MEDP have rallied 81.4% compared with the industry’s 6.2% growth over the past year.
MEDP’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.8%. In the last reported quarter, it delivered an earnings surprise of 30.6%.
ResMed, sporting a Zacks Rank #1 at present, has an estimated fiscal 2024 earnings growth rate of 19.6% compared with the industry’s 13.7%. Shares of RMD have dropped 1.5% against the industry’s 3.9% growth over the past year.
RMD’s earnings surpassed estimates in three of the trailing four quarters and missed in one, delivering an average surprise of 2.8%. In the last reported quarter, it delivered an earnings surprise of 10.9%.
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Thermo Fisher Scientific Inc. (TMO) : Free Stock Analysis Report
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