By Dania Nadeem and Carl O’Donnell
(Reuters) -Thermo Fisher Scientific Inc beat first-quarter profit estimates on Thursday as strong sales of materials used to make COVID-19 vaccines and treatments helped offset slowing demand for tests that detect the novel coronavirus.
Thermo Fisher raised its 2021 revenue forecast above Wall Street estimates on expectations that demand will remain strong for raw materials used in vaccines throughout the year.
“Demand for vaccine production and raw materials is extremely robust,” Thermo Fisher Chief Executive Marc Casper said in an interview. “We are scaling our capacity to meet the demand.”
Thermo Fisher expects 2021 revenue of $35.6 billion, above analysts’ estimate of $35.5 billion, according to Refinitv data.
It reported $2.9 billion of COVID-19 response revenue in the first quarter, which includes sales related to COVID-19 vaccines and therapies as well as diagnostic testing, Casper said on a call to discuss the results.
Thermo Fisher forecast 2021 profit of $21.97 per share, shy of analysts’ estimates of $22.
James Mainwaring, an analyst at Atlantic Equity, said the first-quarter results fell short of his expectations.
“We believe the reason for the shortfall to our estimates is a slowing of demand for its COVID-19 diagnostics,” he said, adding that, “COVID-19 tailwinds look to be slowing slightly quicker than we expected.”
Thermo Fisher shares were down 3.7% to $467.76 in late morning trading.
Sales of the specialty diagnostics unit, which makes coronavirus tests, rose 68.6% to $1.62 billion, but missed analyst estimates of $1.83 billion.
The company said it expects demand for its COVID-19 tests to decline this quarter and throughout the year as more people get vaccinated.
Abbott Laboratories also said this month it expects a lessening of demand for some of its COVID-19 diagnostics.
Thermo Fisher in March said it would work with Pfizer Inc and BioNtech SE to produce their COVID-19 vaccine in Italy.
Earlier this month, it announced a deal to buy contract researcher PPD Inc for $17.4 billion to add muscle to its pharmaceutical services business.
Thermo Fisher also acquired a vaccine materials manufacturing business from Groupe Novasep SAS in January for around $900 million that helps make COVID-19 shots for AstraZeneca Plc.
Excluding items, the company earned $7.21 per share in the quarter, topping Wall Street expectations of $6.45 per share, according to Refinitiv IBES data.
(Reporting by Dania Nadeem in Bengaluru; Editing by Ramakrishnan M. and Bill Berkrot)
