Thermo Fisher Scientific, Inc. (TMO) reported first quarter fiscal 2010 earnings per share of 84 cents, beating the Zacks Consensus Estimate of 75 cents and the year-ago earnings of 62 cents.

Sales

Total revenue in the first quarter increased 19% year over year to a record $2.68 billion. Growth was fueled by acquisitions and a favorable foreign currency translation.

Analytical Technologies revenues increased 18% year over year to $1.11 billion. Laboratory Products and Services revenues increased 19% year over year to $1.70 billion. The company follows the practice of reporting inter-segment revenues, which were a negative $127.1 million in the reported quarter.

Margins

Thermo Fisher witnessed an expansion in margins in the first quarter. Gross margin increased 150 basis points (bps) year over year to 42.2%. Adjusted operating and net margins increased 200 bps and 150 bps year over year to 17.5% and 13.1%, respectively. Adjusted figures exclude amortization of acquisition-related intangible assets and other acquisition-related costs; restructuring costs; and related tax benefits.

Balance Sheet and Cash Flow

Thermo Fisher ended the first quarter with cash, cash equivalents and short-term investments of $1.44 billion, a decline of 8% in the first three months of the fiscal year. The company generated free cash flow of $293.5 million in the first quarter.

Outlook

Thermo Fisher has raised its revenue and adjusted earnings per share guidance for fiscal 2010. For the year, the company expects total revenues in the range of $10.65 to $10.80 billion, compared to the previous guidance of $10.60 to $10.80 billion. Adjusted earnings per share should be in the range of $3.40 to $3.50, versus the previous guidance of $3.30 to $3.45.

Headquartered in Waltham, Massachusetts, Thermo Fisher is a scientific instrument maker and a world leader in serving science. The company was formed following the merger of Thermo Electron Corporation with Fisher Scientific International Inc. in November 2006. Thermo Fisher serves its customers through two principal brands, Thermo Scientific and Fisher Scientific.

Currently, we are ‘Neutral’ on Thermo Fisher.

Read the full analyst report on “TMO”
Zacks Investment Research