Should You Continue to Hold Thermo Fisher Stock in Your Portfolio?

Thermo Fisher Scientific Inc.’s TMO recent slew of strategic collaborations reflects its ongoing commitment to sustainable long-term growth. End markets play an important role as well, bolstering the company’s top line. Meanwhile, the adverse impacts of macroeconomic volatilities and fierce competitive pressure raise concerns for Thermo Fisher’s operations.

In the past year, this Zacks Rank #3 (Hold) stock has declined 20.2% compared to the industry’s 15.3% decline. The S&P 500 composite has gained 16.6% in the said period.

The renowned medical and laboratory equipment provider has a market capitalization of $158.1 billion. TMO has an earnings yield of 4.6% compared to the industry’s -4.7%. The company’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 1.8%.

Let’s delve deeper.

Upsides for TMO Stock

Strength in End Markets: Within the pharma and biotech end market, of late, Thermo Fisher’s biosciences and bioproduction businesses have significantly expanded capacity to meet the global vaccine manufacturing requirements. The pharma services business has been providing pharma and biotech customers with the services they need to develop and produce vaccines and therapies globally. The company reported modest second-quarter performance in this end market, driven by research and safety market channels, pharma services and bioproduction businesses.

New Partnerships Expand Business: Thermo Fisher continues to expand business on the back of strategic alliances. Soon after the second quarter, the company expanded its strategic partnership with Sanofi to acquire the latter’s sterile manufacturing site in Ridgefield, NJ.

Furthermore, in the previous quarter, within the electron microscopy space, the company collaborated with the Chan Zuckerberg Institute for Advanced Biological Imaging to advance the understanding of human cells by leveraging cutting-edge cryo-electron tomography technologies. Thermo Fisher also entered into a 10-year virtual power purchasing agreement with an international renewable energy developer, X-ELIO, to accelerate its 100 percent renewable electricity goal for its European operations.

What Ails Thermo Fisher?

Macroeconomic Challenges Continue to Weigh on the Stock: Geopolitical pressure leading to disruptions in economic activity, global supply chains and labor markets are creating a challenging business environment for Thermo Fisher. International conflicts, including the Russia-Ukraine war and the United States-China tariff situation, have increased cybersecurity risks on a global basis.

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Further, volatile financial market dynamics and significant volatility in the price and availability of goods and services are putting pressure on the company’s profitability. Considering these factors, Thermo Fisher may struggle to keep its operating expenses in check. TMO's SG&A expenses rose 5.4%, which caused the operating margin to contract 124 bps in the second quarter.

Tough Competitive Pressure: On account of its diversified portfolio, Thermo Fisher faces different types of competitors, including a broad range of manufacturers and third-party distributors. The competitive landscape is quite tough with changing technology and customer demands that require continuing research and development.

TMO Stock Estimate Trend

The Zacks Consensus Estimate for earnings per share (EPS) has moved up 3 cents to $22.52 in the past 30 days.

The Zacks Consensus Estimate for the company’s 2025 revenues is pegged at $43.90 billion, suggesting a 2.4% rise from the year-ago reported number.

Key Picks

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

Envista has an estimated earnings growth rate of 15.8% for fiscal 2026 compared with the S&P 500 composite’s 11.7% growth. Shares of the company have rallied 15.3% compared with the industry’s 4% growth. NVST’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 16.5%.

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

Phibro Animal Health, currently carrying a Zacks Rank #2 (Buy), has an estimated long-term earnings growth rate of 26% compared with the industry’s 14.2%. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 30.6%. PAHC’s shares have surged 63.9% compared with the industry’s 4.1% growth in the past year.

Boston Scientific, carrying a Zacks Rank #2 at present, has an earnings yield of 2.9% compared to the industry’s -0.9%. Shares of the company have rallied 33.3% compared with the industry’s 4.1% growth. BSX’s earnings outpaced estimates in each of the trailing four quarters, with the average surprise being 30.6%.

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

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