Thermo Fisher Rises 8.7% After Lifting Its Full-Year Outlook

Thermo Fisher Scientific (TMO) rose 8.7% on Thursday to close at $572.32, its highest finish in three months, after the lab-equipment and life-sciences supplier beat second-quarter estimates and raised its full-year forecast. Volume ran about two and a half times the stock’s 20-day average. Buyers showed up in force. The advance helped lift health care on a day the broad market fell.

Revenue grew 10% and profit grew faster

Thermo Fisher reported before Thursday’s open. Revenue reached $11.99 billion, up 10% from a year earlier, with organic growth of 5%. Adjusted earnings were $6.03 a share, up 13%, and topped Wall Street estimates; on a GAAP basis the company earned $4.68, up 9%. Adjusted operating income rose to $2.74 billion, and the adjusted operating margin widened to 22.8%. Chief Executive Marc Casper said customer activity continued to strengthen across the company’s end markets. Management pointed to demand from pharmaceutical and biotech manufacturing and from the research and laboratory-products channel that sells reagents and consumables.

Management lifted both ends of the forecast

The outlook did more of the work. On its earnings call the company raised full-year revenue guidance to a range of $47.4 billion to $48.1 billion, and lifted adjusted earnings guidance to $24.93 to $25.33 a share from a prior $24.64 to $25.12. The finance chief said the company was raising its outlook on the top and bottom line. Most of the 25-cent increase at the profit midpoint came from the quarter that had just closed, with a smaller piece from a better read on the second half, trimmed by a coming divestiture and by currency. Revenue growth of 6% to 8% for the year is now the target, up from the prior range. The new profit range sits above the $24.86 that analysts had modeled, and the revenue outlook brackets the $47.77 billion consensus.

A three-month high that still trails the yearly peak

The move extended a strong run. Thermo Fisher has gained 16% over the past 30 days and 21% over the past 90, and Thursday’s close marked a fresh three-month high. It still sits below its 52-week high of $643.99, about 11% under that peak, and well above the 52-week low of $403.36 it touched earlier in the year. The rebound from that low now runs above 40%. The company’s market value is near $209 billion, and the stock ranked among the biggest large-cap gainers of the session. Health care, tracked by the XLV sector fund, rose 1.3% on Thursday and ranked second among the eleven sectors, even as technology and communication-services names dragged the S&P 500 lower.

A pending divestiture and a higher bar

Management flagged a pending sale of its microbiology business, which it expects to trim full-year earnings by 5 cents a share, with a similar drag from currency. The raised guidance sets the marker for the rest of the year: adjusted profit growth of 9% to 11%, on organic growth the company now pegs near 4%. The next two quarterly reports will show whether the demand Casper described holds. Thursday’s reception was clear.

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