Massachusetts-based medical instruments manufacturer Thermo Fisher Scientific, Inc. (TMO) is set to report its fourth-quarter and full year 2014 earnings numbers before the opening bell on Jan 29.
Last quarter, the company had delivered a 1.18% positive surprise. Let's see how things are shaping up for this announcement.
Factors at Play
According to Thermo Fisher, it is outperforming expectations in terms of the Life Technologies integration and is making considerable progress with respect to the execution of its plans. In fact, we are encouraged to know that Thermo Fisher is ahead of its original synergy target for 2014.
The company currently expects to achieve $110 million in synergies in 2014, up from the last declared expected synergy of $100 million. Quite significantly, the company had originally made a promise of $85 million in synergies. The company is also confident of its overall three-year synergy target which was raised from $300 million to $350 million at the analyst meeting held in May 2014.
Moreover, 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.
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.
Earlier, during its third quarter earnings report, Thermo Fisher had reduced its fiscal 2014 revenue guidance to the range of $16.74 to $16.82 billion (annualized growth of 28% over 2013), from the earlier band of $16.86 to $16.98 billion (29% to 30%). The revision was brought about after taking into consideration the unfavorable change in foreign currency exchange rates. The Zacks Consensus Estimate of $16.79 billion remains within the guided range.
The company also expects to report adjusted EPS for the year in the band of $6.87 to $6.95 (implying annualized growth of 27% to 28%), narrower than the earlier announced range of $6.85 to $6.97 (26% to 29%). The Zacks Consensus Estimate of $6.92 is pegged within the guidance range.
Earnings Whispers
Our proven model does not conclusively show that Thermo Fisher is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Thermo Fisher has a Zacks ESP of +0.52%. That is because the Most Accurate estimate lies at $1.95, while the Zacks Consensus Estimate is pegged lower at $1.94.
Zacks Rank: Thermo Fisher has a Zacks Rank #4 (Sell), which lowers the predictive power of ESP.
Note that, we caution against stocks with Zacks Rank #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:
CR Bard Inc. (BCR), earnings ESP of +0.45% and a Zacks Rank #3 (Hold). CR Bard will report its fourth-quarter 2014 earnings on Jan 29.
Humana Inc. (HUM) has an earnings ESP of +0.86% and a Zacks Rank #2 (Buy). Humana is expected to report its fourth-quarter and 2014 earnings on Feb 4.
HEALTHSOUTH Corp. (HLS) has an earnings ESP of +3.92% and a Zacks Rank #1 (Strong Buy). HEALTHSOUTH is scheduled to report its fourth-quarter and 2014 earnings on Feb 24.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment