By Bhanvi Satija
(Reuters) -Thermo Fisher Scientific on Wednesday forecast annual profit and revenue below Wall Street estimates, signaling that a slump in demand for its services used to make therapies and vaccines will extend at least into the first half of the year.
The medical equipment maker also said it does not expect demand in its key market, China, to improve this year. Thermo's shares fell nearly 4%, dragging down peers Danaher (NYSE:DHR) and Agilent Technologies (NYSE:A) more than 1%.
Analysts said the company's 2024 forecast was largely in-line with its expectations laid out in October, while at least two said the forecast was conservative.
"They've been burned before by not being cautious enough," said Bernstein analyst Eve Burstein.
Thermo Fisher (NYSE:TMO) witnessed sluggish demand last year for its bioprocessing services used to make therapeutics and vaccines, as its biotech clients reined in spending on drug development due to higher interest rates.
Thermo Fisher CEO Marc Casper said biotech clients seem more optimistic than the last five quarters.
"They love the M&A activity that was happening at the end of the year that gets investors excited about new company formation, new rounds of capital," said Casper.
The funding environment for biotechs is "probably stabilizing", said Paul Knight, an analyst at KeyBanc Capital Markets, citing a strong year of regulatory approvals.
"We've got this really strong backdrop of approvals from the U.S. Food and Drug Administration, which ultimately drive research and production," said Knight.
Thermo Fisher forecast annual revenue in a range of $42.1 billion to $43.3 billion, shy of analysts' expectations of $42.93 billion at midpoint, according to LSEG data.
The company expects to earn between $20.95 and $22.00 per share in 2024, below analysts' expectations of $22.04.
Yet, the medical equipment maker posted quarterly adjusted profit of $5.67 per share came in 3 cents ahead of analysts' estimates, helped in part by its cost-reduction measures and higher sales of analytical tools.