Anticipating Thermo Fisher’s Q3 Financial Performance 

Thermo Fisher Scientific

Thermo Fisher Scientific Inc. (NYSE:TMO) is gearing up to unveil its third-quarter 2023 financial results on October 25, 2023, prior to the market’s opening bell.

In the previous quarter, Thermo Fisher reported earnings of $5.15 per share, falling short of the Zacks Consensus Estimate by 5.2%. However, the company outperformed estimates in three of the last four quarters, with an average positive surprise of 1.70%.

Let’s delve into the factors that are expected to shape the upcoming earnings report.

Key Drivers

Similar to the preceding quarter, Thermo Fisher’s Analytical Instruments division is predicted to deliver robust sales performance in the third quarter. This is attributed to the demand for chromatography and mass spectrometry, along with electron microscopy products. Our projections indicate that revenues for Thermo Fisher’s Analytical Instruments segment are estimated to reach $1.89 billion for Q3, signifying a 16.4% year-over-year growth.

In August 2023, TMO introduced the EXENT Solution following IVDR certification. The EXENT solution is a fully integrated and automated mass spectrometry system designed to revolutionize diagnostics and assessments for patients with monoclonal gammopathies, including multiple myeloma. This product launch likely contributed to the second-quarter results, driven by strong customer adoption.

Within the Life-Science Solutions segment, the company is expected to experience a decline due to the moderation in pandemic-related revenues and challenges related to unfavorable macroeconomic conditions and foreign currency fluctuations. Our model anticipates a 23.9% year-over-year decrease, with Life-Science Solutions’ revenues estimated at $2.25 billion for Q3.

The Specialty Diagnostics segment, including the Clinical Diagnostics business related to molecular controls for testing kits, is expected to make positive contributions through continued growth in microbiology and transplant diagnostics. Our model suggests Specialty Diagnostics’ revenues reach $873.3 million in the to-be-reported quarter, reflecting an 18% year-over-year growth.

Within specialty diagnostics, Thermo Fisher recently introduced the first immunoassay designed to assess a mother’s risk of developing pre-eclampsia, a severe complication that can occur during pregnancy and the post-partum period, endangering both mother and baby. The product received Breakthrough designation and FDA clearance, allowing doctors to better manage patient care. This innovation is likely to have positively impacted the company’s revenues in the upcoming quarter.

Furthermore, Thermo Fisher’s launch of a new chromosomal microarray in August 2023, designed to enhance cytogenetic research lab productivity with an industry-leading two-day turnaround time, is expected to have gained strong market adoption, contributing to the company’s Q3 revenues.

However, Thermo Fisher has been experiencing a sustained decline in demand for COVID-19 testing-related products, which is expected to persist at lower levels in 2023 as customer testing and demand for therapies and vaccines decline. This trend is likely to have a negative impact on TMO’s third-quarter revenues.

In the Laboratory Products and Services segment, the company is anticipated to benefit from enhanced productivity and volume leverage in the pharma services business and the research and safety market channel. Recent investments in the pharma services business, including the addition of an early development hub in Bourgoin, France, are likely to have contributed to the company’s top-line growth.

In August 2023, Thermo Fisher acquired CorEvitas for $912.5 million in cash. This acquisition is expected to strengthen the company’s clinical research capabilities with a leading regulatory-grade registry platform. CorEvitas will become part of Thermo Fisher’s Laboratory Products and Biopharma Services division, making a significant contribution to the company’s revenues in the third quarter.

Our projections indicate that the Laboratory Products and Services segment is likely to report $6.07 billion in revenues for the third quarter, reflecting an 8.7% year-over-year growth.

Q3 Estimates

The Zacks Consensus Estimate for Thermo Fisher’s third-quarter total revenues stands at $10.63 billion, indicating a slight decline of 0.4% compared to the same quarter in the previous year. The consensus estimate for earnings is projected at $5.66 per share, representing an 11.4% increase over the year-ago quarter’s figure.

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