© Reuters. FILE PHOTO: A company flag flies outside the offices of Thermo Fisher Scientific offices in Waltham, Massachusetts, U.S., August 2, 2023. REUTERS/Brian Snyder/File Photo
By Bhanvi Satija
(Reuters) -Thermo Fisher Scientific forecast annual profit and revenue below Wall Street estimates on Wednesday, a sign that a slump in demand for its services used to make therapeutics and vaccines will continue, sending its shares down 2%.
The downbeat forecast comes a day after rival Danaher (NYSE:) said it expects core revenue to decline by a low single-digit percentage this year.
Thermo Fisher (NYSE:) and Danaher have both seen sluggish demand throughout last year for their bioprocessing services used to make therapies and vaccines, as their biotech clients were cautious in drug development spending owing to rising interest rates.
Slowing growth in key market China has also crimped demand for contract research services and lab equipment.
At a recent industry conference, Thermo Fisher CEO Marc Casper said he had expected the company’s performance in 2024 to be a “mirror image” of 2023, reiterating its management’s stand from October.
Thermo Fisher forecast annual revenue in a range of $42.1 billion to $43.3 billion, below analysts’ expectations of $42.93 billion at midpoint, according to LSEG data.
Bernstein analyst Eve Burstein said the company’s forecast was conservative. “They’ve been burned before by not being cautious enough.”
The company expects to earn between $20.95 and $22.00 per share in 2024, below analysts’ expectations of $22.04.
However, Thermo Fisher’s fourth-quarter profit came in slightly ahead of estimates, helped in part by its cost-reduction measures and higher sales of analytical tools.
Burstein said the analytical unit’s performance – with revenue of $2.04 billion – was the biggest surprise in the quarter.
Analysts were expecting quarterly sales of $1.75 billion from the unit.
Thermo Fisher’s quarterly adjusted profit of $5.67 per share came in 3 cents ahead of analysts’ estimates. Total costs and operating expenses fell 5.8% to $9.03 billion.