Thermo Fisher Scientific Falls Short of Revenue Expectations in Q3, but Shows Sequential Improvement
Thermo Fisher Scientific Inc. (NYSE: TMO), a leading provider of scientific instruments and services, reported third-quarter revenue of $10.59 billion, coming in slightly below analyst expectations of $10.64 billion. While this represents a near miss, it’s worth noting that the company experienced sequential improvement in revenue growth compared to the second quarter.
Breaking down the segments, the Life Sciences Solutions Segment saw a 1.9% decline in revenue to $2.39 billion. Meanwhile, Analytical Instruments Segment sales surged by 3.1% to $1.81 billion. The Specialty Diagnostics Segment demonstrated strong performance with a 4.2% revenue increase to $1.13 billion. Finally, the Laboratory Products and Biopharma Services segment reported nearly flat sales at $5.74 billion.
Despite the revenue miss, Thermo Fisher managed to beat adjusted earnings per share (EPS) estimates, reporting $5.28 compared to the consensus of $5.25. However, this figure still represents a decline from the $5.69 reported in the same quarter a year ago. Adjusted operating income for the quarter landed at $2.36 billion, down from $2.56 billion in the year-ago period. The adjusted operating margin also contracted to 22.3% from 24.2% in the third quarter of 2023.
Looking Forward: Guidance and Market Reaction
Despite the mixed Q3 results, Thermo Fisher remains optimistic about its prospects. The company reaffirmed its 2024 sales guidance of $42.4 billion to $43.3 billion, slightly above the consensus estimate of $42.91 billion. They also revised their adjusted EPS guidance upward, now projecting $21.35 to $22.07 compared to their prior guidance of $21.29 to $22.07 and the consensus of $21.72.
Investors reacted negatively to the earnings report, with TMO shares trading down 2.17% to $573.66 at the last check on Wednesday. The market likely focused on the revenue miss, particularly as Thermo Fisher is a key player in the high-demand GLP-1 weight loss drug market, which has been a source of growth for many pharmaceutical companies.
Overall, Thermo Fisher’s Q3 performance was a mixed bag. While the sequential improvement in revenue growth is encouraging, the revenue miss and decline in adjusted operating income have dampened investor sentiment. However, the company’s reaffirmed sales guidance and upward adjusted EPS guidance suggest they remain confident in their ability to achieve their 2024 objectives.
