Thermo Fisher cuts 2023 profit outlook again on weak biotech demand

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Thermo Fisher cuts 2023 profit outlook again on weak biotech demand

Oct 25 (Reuters) – Thermo Fisher Scientific (TMO.N) on Wednesday forecast full-year profit and sales below Wall Street estimates, hurt by lower-than-expected demand for its services used to make therapies and vaccines as well as higher raw material costs for the year.

The medical equipment maker’s shares fell more than 1% in premarket trading as it cut its annual adjusted profit expectations for the second straight quarter.

The impact of the macroeconomic conditions that the industry has experienced through the year increased in the third quarter, Thermo Fisher said.

The company has been expanding its range of services through deals in recent years, in a bid to become a one-stop shop for its biotech and large pharmaceutical clients.

Thermo Fisher’s outlook cut is “more or less” expected and focus will now shift to how this will impact the company in 2024, J.P.Morgan analyst Rachel Vatnsdal said.

The company and rival Danaher (DHR.N) have previously warned of soft demand for their bioprocessing services used to make therapies and vaccines, as biotechs become more cautious about their drug development spending.

Rising interest rates have squeezed funding needed for drug development programs, weighing on demand for contract research services offered by Thermo Fisher and Danaher.

Thermo Fisher cut its revenue expectations for the year to $42.7 billion, from its previous outlook of $43.4 billion to $44 billion.

The company now expects to earn $21.50 per share, excluding items, for 2023, down from its previous outlook of $22.28 to $22.72 per share.

Analysts were expecting full-year adjusted profit of $22.28 per share and revenue of $43.49 billion, according to LSEG data.

Thermo Fisher reported third-quarter revenue of $10.57 billion, missing analysts’ estimates of $10.60 billion.

On an adjusted basis, the company earned $5.69 per share, beating estimates of $5.61.

Reporting by Bhanvi Satija in Bengaluru; Editing by Shinjini Ganguli and Shounak Dasgupta

Source: Reuters