(Reuters) – Thermo Fisher Scientific Inc (NYSE: ) on Wednesday raised its annual earnings forecast and reported better-than-expected second-quarter profit, citing improved demand for its instruments and services used in clinical trials.
Contract drugmakers saw spending cutbacks from their biotech clients in 2023 amid rising interest rates.
The public funding environment for early-stage biotech companies is expected to improve in the second half of this year, on the back of a Federal Reserve rate cut in September. Some analysts have suggested that funding for biotech companies could stabilize due to strong regulatory approvals in the US in 2023.
Thermo’s expected increase comes a day after rival Danaher (NYSE:) said it saw “positive momentum” for its products and services used in developing biologics. However, the company stressed that underlying revenue is expected to fall to single digits this year.
Thermo Fisher now expects annual earnings in the range of $21.29 to $22.07 per share, compared with the previous forecast of $21.14 to $22.02 per share.
However, shares of the medical equipment maker fell 3% to $535 in premarket trading, with the higher forecast falling short of analysts’ expectations of $21.70 per share for the year, according to London Stock Exchange data.
On an adjusted basis, the Waltham, Massachusetts-based company earned $5.37 per share in the quarter ended June 29, compared with analysts’ expectations of $5.12 per share.
Sales in the Laboratory and Biopharmaceutical Services segment, which provides products used in clinical trials, were $5.76 billion, beating analysts’ expectations of $5.48 billion.
Revenue from this segment accounts for more than half of Thermo Fisher’s total sales, which came in at $10.54 billion for the quarter, slightly beating estimates of $10.51 billion.