Thermo Fisher Scientific (TMO) posted a “high-quality beat” on Wednesday while fellow medtech Boston Scientific’s (BSX) report was just in line. But both TMO stock and BSX stock jumped.
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RBC Capital Markets analyst Conor McNamara says Thermo Fisher is executing well on its effort to become a one-stop shop for the biopharma industry. The company supplies equipment, tools and services to help the drug development process.
In addition to its strong fourth-quarter report, Thermo Fisher issued a bullish outlook for 2023.
“In our view, this is a high-quality beat and guide, and we expect the shares to trade up,” McNamara said in a note to clients. And that’s exactly what happened. In morning trades on the stock market today, TMO stock advanced 3.1% near 587.80. BSX stock also popped 2.5% near 47.40.
TMO Stock: Handily Beating Forecasts
Thermo Fisher’s fourth-quarter sales grew 7% to $11.45 billion, well above expectations for $10.43 billion, according to FactSet. Adjusted earnings sank more than 17% to $5.40 per share. But that was better than analysts’ call for a slide to $5.19 per share.
Excluding the impact of mergers and Covid diagnostic sales, Thermo Fisher’s base business grew 14%, Evercore ISI analyst Vijay Kumar said in a report. He has an outperform rating and 590 price target on TMO stock.
He noted that “95% of this beat was driven by base business strength, and Covid was a minor contributor to the beat.” Covid tests brought in about $370 million in sales, roughly $70 million above forecasts.
From a segment perspective, the beat came from Thermo Fisher’s lab products and services, and life science solutions segments, Kumar said. Revenue from the life sciences solutions business fell 27% to $3.05 billion. But that was better than projections for a steeper decline. Lab products and services sales surged about 42% to $5.95 billion.
For the year, Thermo Fisher projected adjusted earnings of $23.70 a share and $45.3 billion in sales. Analysts following TMO stock forecast earnings of $23.06 a share and $43.74 billion in sales.
BSX Stock: Earnings Come In Light
During the December quarter, Boston Scientific’s sales inched 3.7% higher to $3.24 billion, coming in line with forecasts. Organically, sales rose 7.1% — though that was below forecasts for 8.1% sales growth, organically, Evercore’s Kumar said.
Adjusted earnings per share were slightly below BSX stock analysts’ expectations at 45 cents per share, but suffered a negative 4-cent hit due to the Italian government’s new payback provision. Excluding that impact, profit would have been above forecasts. Earnings were flat year over year.
Boston Scientific expects 5%-7% sales growth on a strict, as-reported basis for 2023. Organically, sales are expected to increase 6%-8%. The company also guided to $1.86-$1.93 in per-share adjusted earnings. Analysts called for adjusted per-share profit of $1.93 and $13.45 billion in sales.
BSX stock is forming a flat base with a buy point at 48.05, according to MarketSmith.com.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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