Thermo Fisher Scientific Inc. (TMO): A Bull Case Theory

Insider Monkey01-14

We came across a bullish thesis on Thermo Fisher Scientific Inc. (TMO) on Rijnberk InvestInsights’ Substack by Daan Rijnberk. In this article, we will summarize the bulls’ thesis on TMO. Thermo Fisher...

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(TMO): A Bull Case Theory\n</h2>\n\n<h4 class=\"meta\">\n\n\n2025-01-14 01:42 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/thermo-fisher-scientific-inc-tmo-174256717.html><strong>Insider Monkey</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>We came across a bullish thesis on Thermo Fisher Scientific Inc. (TMO) on Rijnberk InvestInsights’ Substack by Daan Rijnberk. In this article, we will summarize the bulls’ thesis on TMO. Thermo Fisher...</p>\n\n<a href=\"https://finance.yahoo.com/news/thermo-fisher-scientific-inc-tmo-174256717.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"IE00BJJMRZ35.SGD","symbol_name":"JANUS HENDERSON GLOBAL LIFE SCIENCES \"I2\" (SGDHDG) ACC","start_time":0,"source_url":"https://finance.yahoo.com/news/thermo-fisher-scientific-inc-tmo-174256717.html","article_id":"2503535465","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2503535465","pubTimestamp":1736790176,"columns":[],"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"We came across abullish thesison Thermo Fisher Scientific Inc.  on Rijnberk InvestInsights’ Substack by Daan Rijnberk. In this article, we will summarize the bulls’ thesis on TMO. Thermo Fisher Scientific Inc. 's share was trading at $542.31 as of Jan 10th. 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(TMO) on Rijnberk InvestInsights’ Substack by Daan Rijnberk. In this article, we will summarize the bulls’ thesis on TMO. Thermo Fisher Scientific Inc. (TMO)'s share was trading at $542.31 as of Jan 10th. TMO’s trailing and forward P/E were 34 and 23.15 respectively according to Yahoo Finance.\n\nThermo Fisher Scientific is recognized as one of the highest-quality and most impressive compounders in the healthcare and pharmaceutical industry. The company offers investors a unique way to capitalize on sector growth without the risks associated with patent expirations or the need for revolutionary new medicines. Thermo Fisher’s business is highly diversified, with over 80% of its revenue generated from recurring sources, making it a stable, de-risked investment. The company’s operations benefit from a significant economic moat, anchored by long-standing customer relationships, market leadership in life sciences, and high switching costs—particularly in drug development, where its equipment and consumables are essential. This robust market position allows Thermo Fisher to maintain reliable growth, with management projecting high-single-digit revenue growth and mid-teens earnings per share (EPS) growth for the foreseeable future.\nDespite being a favorite among investors for the past decade, Thermo Fisher’s stock has faced some challenges post-pandemic. The surge in revenues from COVID-related products such as test kits and reagents in 2020 drove the stock to an all-time high, but with the pandemic subsiding, these revenue streams have waned, leading to a slowdown in growth. As a result, the stock has experienced a period of flat performance in recent years, currently trading about 15% below its late-2021 peak. While this recent performance may raise concerns, the company’s strong fundamentals remain intact, and the current drop in valuation presents an appealing opportunity for investors. Thermo Fisher continues to lead innovation across several key sectors, including pharmaceuticals, biotech, and diagnostics, and serves over 50 of the top global pharmaceutical companies. Furthermore, the company’s strategic approach to acquisitions, having acquired 28 businesses over the last decade, continues to strengthen its market position and enhance its capacity for sustained growth.\nThermo Fisher's broad product portfolio, solid customer base, and de-risked revenue model make it a compelling long-term investment. Despite the subdued stock performance in the short term, the company's growth prospects remain promising, driven by its market leadership and resilience in various sectors. In its Q3 2024 report, Thermo Fisher showed a clear recovery, with growth accelerating after a challenging 2023, primarily due to the loss of COVID-related revenues. The company’s performance for the quarter revealed a sequential increase in revenue, marking the third consecutive quarter of growth. Though some regions, like North America, experienced slight revenue declines, others, including Europe and Asia-Pacific, showed stability. Additionally, the company’s pharma and biotech segment saw a modest decline, while other segments like academic, government, and diagnostics saw low single-digit growth.\nDespite facing some margin pressure from increased operating costs, Thermo Fisher achieved impressive earnings, with a 22% increase in free cash flow (FCF), totaling $5.4 billion year-to-date. This strong cash flow, combined with a healthy cash position of $6.6 billion, supports its capital return strategy and ongoing merger and acquisition activities. The company’s disciplined approach to capital allocation involves using 60-75% of its FCF for acquisitions, with the remainder directed toward shareholder buybacks, which are expected to continue. Thermo Fisher’s credit rating remains strong at A-, and its dividend, though small at 0.3%, is growing at a mid-teens compound annual growth rate (CAGR), with ample room for further increases. With its focus on innovation and market share gains, the company is well-positioned for continued growth, offering a solid outlook despite short-term challenges.\nThermo Fisher projects accelerate growth in Q4 2024, with full-year revenue expected to be between $42.4 billion and $43.3 billion, reflecting flat year-over-year growth. In contrast, the broader industry is expected to see a low single-digit decline. The company has also raised its EPS guidance for the third time this year, with a projected range of $21.35 to $22.07, reflecting modest growth. Over the long term, Thermo Fisher targets a 7-9% organic revenue growth CAGR, supported by a 4-6% growth in the broader market, with acquisitions potentially driving even higher growth. With annual organic margin expansion projected at 40-50 basis points, the company anticipates mid-teens EPS and FCF growth. Given its strong moat, competitive positioning, and solid growth outlook, Thermo Fisher remains an attractive investment opportunity, with a target price of $668 by the end of 2026, offering an 11% compound annual growth rate (CAGR). Therefore, the stock is a solid buy below $550 per share.\nThermo Fisher Scientific Inc. (TMO) is on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 98 hedge fund portfolios held TMO at the end of the third quarter which was 108 in the previous quarter. While we acknowledge the risk and potential of TMO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TMO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.\nREAD NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.\nDisclosure: None. This article was originally published at Insider Monkey.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.30.2","shortVersion":"4.30.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2503535465"}