Thermo Fisher, a leading maker of scientific instruments and laboratory equipment, on Wednesday lowered its full-year 2023 revenue and earnings outlook due to cautious customer spending and a weakening economy in China.
Biotech and other life sciences customers are struggling with a funding slump after a pandemic-driven spending surge, while in China, economic conditions worsened during the quarter even as the country is trying to attract foreign investment, Thermo Fisher CEO Marc Casper said.
“Those same two factors increased in impact, and we now expect core market growth to be slightly negative for the year,” Casper said on the company’s earnings call, adding that Thermo Fisher still expects growth to outpace its rivals as the company takes share.
Third-quarter revenue fell 1% from a year ago to $10.57 billion, while core organic revenue, excluding COVID-19 testing, acquisitions and currency translation, grew 1%.
J.P. Morgan analyst Rachel Vatnsdal wrote in a note to clients that Thermo Fisher’s third-quarter revenue was below the average analyst forecast of $10.64 billion.
Like its competitor Danaher, which on Tuesday reported a decline in third-quarter revenue, Thermo Fisher said demand from bioprocessing customers was weaker than expected.
“One of the things that we assumed in our previous guidance was that in our bioprocessing business, orders would stabilize, start to normalize, in the third quarter,” Casper said. “We did not see that.”
Thermo Fisher lowered its guidance for the full year, forecasting 2023 revenue of $42.7 billion, with core organic revenue growth of 1%, and adjusted earnings per share of $21.50. In July, the company forecast revenue in a range of $43.4 billion to $44 billion, with core organic revenue growth of 2% to 4% and adjusted EPS of $22.28 to $22.72.
TD Cowen analyst Dan Brennan said Thermo Fisher’s fourth-quarter guidance reflected a sharper cut than he expected.
“China, Bioprocess, Biotech funding/demand and larger Biopharma spending (plus instrument weakness) have been areas of uncertainty/concern,” Brennan wrote in a note.
Thermo Fisher also provided an early look at its expectations for 2024 on the call, predicting its core organic revenue growth rate will be similar to 2023 at approximately 1%.