Thermo Fisher Scientific posted a "high-quality beat" on Wednesday while fellow medtech Boston Scientific's report was just in line. But both TMO stock and BSX stock jumped.
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. On the stock market today, TMO stock advanced 3% and closed at 587.36. BSX stock also popped 2.8% to close at 47.54.
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.
