Is it Worth Retaining Thermo Fisher Stock in Your Portfolio Now?

Thermo Fisher Scientific Inc.’s TMO recent slew of strategic acquisitions reflects its ongoing commitment to sustainable long-term growth. End markets play an important role as well, bolstering Thermo Fisher’s top line. Meanwhile, unfavorable foreign exchange and a fierce competitive landscape may create operational challenges for the company.

In the past year, this Zacks Rank #3 (Hold) company’s shares have declined 15.5% compared with the industry’s 7.5% decline and the S&P 500 composite’s 8.3% rise.

The renowned medical and laboratory equipment provider has a market capitalization of $182.21 billion. TMO’s earnings yield of 4.68% compares favorably to the industry’s -3.57%. Its earnings surpassed estimates in each of the trailing four quarters, the average surprise being 4.21%. 

Let’s delve deeper.

Upsides for Thermo Fisher

Strength in End Markets: Recently, Thermo Fisher’s biosciences and bioproduction businesses within the pharma and biotech end market have significantly expanded their capacity to meet global vaccine manufacturing requirements. The company reported strong fourth-quarter performance in this end market, driven by research and safety market channels, pharma services and bioproduction businesses.

Within the ‘academic and government’ and ‘industrial and applied’ end markets, TMO delivered strong growth in its chromatography and mass spectrometry business and research and safety market channel during the quarter. Within the ‘diagnostics and healthcare’ end market, despite the runoff of COVID-19 testing-related revenues, the company delivered low-single-digit revenue growth on the back of transplant diagnostics and immunodiagnostics businesses, as well as the healthcare market channel. 

Strategic Acquisitions to Boost Growth: Thermo Fisher’s business strategy primarily involves expanding through the strategic acquisition of technologies and businesses that complement its existing products and services. A few of its recent strategic acquisition, which are likely to drive future growth, include the $3.1 billion acquisition of Olink Holdings in 2024. The acquisition is strategically enhancing Thermo Fisher’s capabilities in the high-growth proteomics market with the addition of highly differentiated solutions.

The company’s other major acquisitions in recent times include CorEvitas and MarqMetrix. The CorEvitas buyout advanced Thermo Fisher’s clinical research capabilities with a leading regulatory-grade registry platform. The acquisition of MarqMetrix has added highly complementary Raman-based in-line PAT to Thermo Fisher’s portfolio. 

Concerns for Thermo Fisher

Exposure to Foreign Currency: International markets contribute a substantial portion Thermo Fisher’s revenues, and the company intends to continue expanding its presence in these regions. As Thermo Fisher’s international sales grow, exposure to fluctuations in currency exchange rates is likely to have a greater impact on its financial results.

Tough Competitive Pressure: Due to its diversified portfolio, Thermo Fisher faces various types of competitors, including a broad range of manufacturers and third-party distributors. The competitive landscape is quite challenging, with rapidly changing technology and evolving customer demands that necessitate ongoing research and development.

TMO Stock Estimate Trend

The Zacks Consensus Estimate for 2025 earnings per share (EPS) has moved up 2 cents to $23.30 in the past 30 days.

The Zacks Consensus Estimate for 2025 revenues is pegged at $43.88 billion, implying a 2.3% rise from the year-ago reported number.

Key Picks

Some better-ranked stocks in the broader medical space are Phibro Animal Health PAHC, Boston Scientific BSX and Cardinal Health CAH.

Phibro Animal Health has an estimated fiscal 2025 earnings growth rate of 62.2% compared with the industry’s 17.2%. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 27.06%. The company’s shares have surged 73.5% compared with the industry’s 9.5% growth in the past year.

PAHC sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Boston Scientific, carrying a Zacks Rank #2 (Buy) at present, has an earnings yield of 2.7% compared with the industry’s 1.5%. Shares of the company have rallied 47.1% compared with the industry’s 9.5% growth. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.25%.

Cardinal Health, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 10.7% compared with the industry’s 9.5%. Shares of the company have rallied 17.5% against the industry’s 3.2% decline. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 9.64%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research