Massachusetts-based medical instruments manufacturer Thermo Fisher Scientific, Inc. (TMO) is set to report its third-quarter 2014 earnings results before the opening bell on Oct 22.
Last quarter, the company delivered a 6.17% positive surprise. Let's see how things are shaping up for this announcement.
Factors at Play
Thermo Fisher boasts strong international operations and has been witnessing consistent growth in the Asia-Pacific region. Currently, the company is confident that revenue growth in China will be much stronger in the second half of 2014 resulting in high single-digit growth for the full year.
In the last reported quarter, the company expanded its successful TSQ 8000 triple quad offering by launching the TSQ 8000 Evo. . The product launch was in line with Thermo Fisher's focus on creating new opportunities in applied markets, while management targets at providing its customers more sophisticated tools for non-targeted analysis in the next quarter and beyond.
However, the company continues to face challenging growth-hindering headwinds like a deteriorating economic scenario in the international market, exposure to fluctuating foreign currency and tough competition from potent rivals.
For the full year 2014, Thermo Fisher expects total sales in the range of $16.86–$16.98 billion and adjusted earnings per share of $6.85–$6.97. The Zacks Consensus Estimate of $16.94 million for revenues lies within the company's guided range. The current Zacks Consensus Estimate of $6.92 also lies within the company's guided range.
Earnings Whispers?
Our proven model does not conclusively show that Thermo Fisher is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Srong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Negative Zacks ESP: Thermo Fisher has a Zacks ESP of -1.18%.That is because the Most Accurate estimate lies at $1.67, while the Zacks Consensus Estimate is pegged higher at $1.69.
Zacks Rank: Though Thermo Fisher has a Zacks Rank #3 which increases the predictive power of ESP; when combined with a -1.18% ESP, it makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Pacific Biosciences of California, Inc. (PACB), earnings ESP of +36.84% and a Zacks Rank #1.
Hologic Inc. (HOLX), earnings ESP of +5.41% and a Zacks Rank #3.
Heartware International Inc. (HTWR), earnings ESP of +21.21% and Zacks Rank #3.
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