Sign in

    Thermo Fisher Scientific Inc (TMO)

    Q2 2024 Earnings Summary

    Reported on Jan 10, 2025 (Before Market Open)
    Pre-Earnings Price$552.24Last close (Jul 23, 2024)
    Post-Earnings Price$552.92Open (Jul 24, 2024)
    Price Change
    $0.68(+0.12%)

    What went well

    • Thermo Fisher Scientific is experiencing strong growth in its Analytical Instruments segment, with a 3% increase in the quarter, driven by excellent momentum in differentiated products like electron microscopy and the Orbitrap Astral mass spectrometer, showcasing the company's focus on innovation and cutting-edge technology.
    • The company is outperforming in the academic and government markets, achieving low single-digit growth despite challenging comparisons, fueled by high demand for its high-end innovative products such as the Orbitrap Astral and Thermo Scientific Stellar mass spectrometers. This indicates Thermo Fisher's ability to capitalize on strong scientific drivers and maintain growth in key markets.
    • Thermo Fisher's strategic focus on differentiating its competitive position and delivering superior organic growth positions the company to further enhance its industry leadership. Management expresses confidence in their long-term strategy to outperform the market and create value, even in challenging market conditions.

    What went wrong

    • Thermo Fisher Scientific is experiencing "muted" market conditions in China, which may impact growth prospects in that region. Despite reporting mid-single-digit growth, the CEO characterized the environment as muted.
    • Analytical Instruments market conditions are not yet at normal levels, with the company acknowledging the impact of the muted conditions in China. This suggests potential headwinds in this important segment.
    • Market recovery is expected to be gradual rather than rapid, with modest improvements projected in the second half of the year. The CEO indicated that returning to normal market growth rates may take several quarters.

    Q&A Summary

    1. 2025 Market Outlook
      Q: Are you confident in your 2025 market growth assumptions?
      A: Marc Casper expressed confidence in providing detailed 2025 guidance in January 2025, noting that the year is progressing as expected with markets improving modestly in the back half of 2024, which will provide momentum going into 2025.

    2. China Sales and Stimulus Impact
      Q: How did China perform this quarter and what is the impact of stimulus?
      A: China grew mid-single digits in the quarter due to good execution and an easy comparison. Marc expects stimulus effects to appear primarily in revenue in 2025, with some impact in Q4 2024, and noted no signs of customers holding back spending or any "air pockets".

    3. Operating Margins Outlook
      Q: What is the outlook for operating margins, especially in Lab Products and Services?
      A: The current margin profile reflects the impact of transitioning vaccine-related capacity. There is confidence in driving strong margin expansion as top-line growth returns and costs have been adjusted appropriately.

    4. Bioproduction and LSS Performance
      Q: Can you discuss the improvement in Life Science Solutions and bioproduction?
      A: There was sequential improvement with biosciences leading growth, driven by adoption in pharma and biotech. Bioproduction progressed as expected with sequential revenue and order growth, a favorable book-to-bill ratio, and strong momentum compared to others.

    5. Clinical Research Business and Biotech Funding
      Q: How is the clinical research business performing amid biotech funding trends?
      A: The clinical research business delivered positive organic revenue growth despite headwinds from vaccine and therapy roll-off. There was an acceleration of authorizations from biotech customers in Q2, indicating improved funding and confidence, which bodes well for revenue in 2025 and 2026.

    6. Capital Deployment Strategy
      Q: Are you playing offense in capital deployment amid market conditions?
      A: Marc highlighted the company's ability to take a long-term perspective and differentiate their competitive position through investment in innovation, further solidifying industry leadership.

    7. Biopharma Customer Spending Patterns
      Q: What are you seeing from larger biopharma customers versus smaller ones?
      A: Larger customers focus on supply chain resiliency and innovation productivity, leveraging Thermo Fisher's capabilities. Smaller customers show higher confidence with improved funding, leading to increased authorizations of new clinical trials, which is expected to flow through as increased activity into 2025.

    8. Analytical Instruments Performance
      Q: How did Analytical Instruments perform this quarter?
      A: The segment grew 3% in the quarter, with market conditions aligning with expectations. There was strong momentum in differentiated products like electron microscopy and the Orbitrap Astral mass spectrometer, driven by innovation.

    9. CDMO Capacity Expansion
      Q: How are you approaching CDMO capacity given recent expansions?
      A: Demand for sterile fill-finish capabilities remains strong, with expansion of lines at sites. The company ensures capacity aligns with forecasted demand and feels positive about their position in the market.

    10. Academic Markets Outlook
      Q: Where are academic markets headed from here?
      A: Encouraged by low single-digit growth in academic and government markets in Q2. High-end differentiated products are seeing strong demand, and long-term growth is typically low single digits, aligning with expectations.

    Related Publications