Thermo Fisher Scientific, Inc. TMO, the MA-based medical instruments manufacturer, is expected to beat expectations when it reports second-quarter 2017 results on Jul 26, before the market opens.

Last quarter, the company posted earnings of $2.08 per share, surpassing the Zacks Consensus Estimate by 3%. In fact, Thermo Fisher's earnings outpaced the Zacks Consensus Estimate in all of the past four quarters with an average beat of 2.3%. Let’s see how things are shaping up prior to this announcement.

Thermo Fisher Scientific Inc Price, Consensus and EPS Surprise

 

Thermo Fisher Scientific Inc Price, Consensus and EPS Surprise | Thermo Fisher Scientific Inc Quote

Why a Likely Positive Surprise?  

Our proven model shows that Thermo Fisher is likely to beat on earnings because it has the right combination of two key ingredients. 

Zacks ESP: Earnings ESP which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +0.44%. This is a leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Thermo Fisher currently carries a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating estimates. The Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.  

The combination of Thermo Fisher’s favorable Zacks Rank and positive ESP makes us confident in looking for an earnings beat this time around. 

What is Driving the Better-Than-Expected Earnings? 

The company’s focus to boost growth through implementation of strategies and strengthening of its product offerings is encouraging. These initiatives are likely to help it post solid results in the first quarter.

The company has already spent $750 million on research and development in 2016 and the same trend is expected through this year too. Some recently introduced noteworthy products include its new iCAP triple-quad mass spec system for clinical research in pharma Quality Assurance/ Quality Control (mass spectrometry and chromotography platforms); cloud-based application that connects electronic pipettes among individual users in the laboratories (within laboratory products); CarrierScan Assay, a microarray-based solution detecting over 6,000 genomic variations associated with 600 inherited diseases (within Genetic Sciences).

It also introduced new targeted assays for cancer research that run on Ion Torrent Next-Generation Sequencing instruments; new tests for autoimmune disease and drugs of abuse; and new Clariom Pico assays for more effective biomarker discovery. Notably last month, the US FDA had granted a premarket approval for the company’s Oncomine Dx Target Test. We expect all innovations and product launches to significantly contribute to the company’s top line in the second quarter itself.