After strong Q3, Thermo Fisher (TMO) expects to end FY21 on a high note

The shares of Thermo Fisher Scientific Inc. (NYSE: TMO), a leading provider of analytical instruments and software, climbed to a record high this week, extending the positive momentum that came after the recent earnings release. For the third quarter of 2021, the Waltham-based engineering firm had reported stronger-than-expected earnings and revenues. Taking a cue from the buoyancy of the life sciences market and encouraging demand conditions, the management also raised its full-year 2021 guidance.

Bullish View

The stock has been trading above the 52-week average over the last several months, setting new records regularly. Despite the recent rally, TMO has enough room for further growth, if the latest target price is any indication. The majority of analysts following Thermo Fisher feel it is a good investment option that can create decent shareholder value.

It is deemed a safe investment from the long-term perspective, thanks to the company’s impressive fundamentals and growing relevance of its healthcare offerings. Moreover, the company is quick to adapt to changing market conditions, and the most recent example is the rollout of COVID-19 testing kits. Also, the acquisition of contract research organization PPD Inc., for around $17 billion, would help the company strengthen its foothold in the healthcare industry.

Strong Earnings

Earnings beat estimates in every quarter in the past two decades and annual growth accelerated, with the margin widening in the pandemic era. In the three months ended September 2021, adjusted earnings increased to $5.76 per share from $5.63 per share in the prior-year period and came in above analysts’ forecast. The bottom-line topped expectations in each of the trailing four quarters. Meanwhile, unadjusted profit declined to $1.90 billion or $4.79 per share from $1.93 million or $4.84 per share in the third quarter of 2020.

Third-quarter revenues increased 9% year-over-year to $9.33 billion. Market watchers were looking for slower growth. All the key business segments, except the Specialty Diagnostics business, registered growth.

Read management/analysts’ comments on quarterly reports

“Our incredibly strong performance in the third quarter demonstrates our proven growth strategy powered by our PPI Business System. We continue to deliver exceptional performance in revenue, earnings, and free cash flow.  And we are launching innovative new products and expanding our capabilities and capacity to enhance our customer value proposition. Our team executed at a very high level during the first nine months of the year, and we are on track to deliver another outstanding year and set the company up for an even brighter future,” said Marc Casper, chief executive officer of Thermo Fisher.

On the Bourses

TMO has gained 24% so far this year, all along setting new records. The stock traded lower on Wednesday afternoon, after closing the previous session lower.