Will Thermo Fisher Scientific (TMO) Benefit from Favorable Trends in the Market?

Baron Funds, an investment management company, released its fourth-quarter investor letter for the “Baron Health Care Fund”. A copy of the letter can be downloaded here. The fund rose 13.10% (Institutional Shares) in the quarter, compared to a 11.92% gain for the Russell 3000 Health Care Index (benchmark) and a 2.40% gain for the Russell 3000 Index (the Index). The Fund returned 10.28% for the full year, compared to 14.56% and 17.15% gains for the indexes, respectively. Strong stock selection in biotechnology contributed to the Fund’s relative gains in the quarter.  The Fund seeks to invest in businesses with secular growth opportunities, a sustainable competitive edge, and strong management. The firm believes that healthcare is a strong sector in the U.S. economy, offering attractive investment opportunities with positive momentum heading into 2026.  Please review the Fund’s top five holdings to gain insights into their key selections for 2025.

In its fourth-quarter 2025 investor letter, Baron Health Care Fund highlighted stocks like Thermo Fisher Scientific Inc. (NYSE:TMO). Thermo Fisher Scientific Inc. (NYSE:TMO) offers life sciences solutions, analytical instruments, specialty diagnostics, laboratory products, and biopharma services. The one-month return of Thermo Fisher Scientific Inc. (NYSE:TMO) was -12.36%, and its shares lost 5.09% of their value over the last 52 weeks. On February 5, 2026, Thermo Fisher Scientific Inc. (NYSE:TMO) stock closed at $542.36 per share, with a market capitalization of $203.769 billion.

Baron Health Care Fundstated the following regarding Thermo Fisher Scientific Inc. (NYSE:TMO) in its fourth quarter 2025 investor letter:

"We added to the position in Thermo Fisher Scientific Inc. (NYSE:TMO), a life sciences tools company that offers instruments and consumables for research, tools for bioproduction, specialty diagnostics, and contract research and manufacturing services. We think the end markets for life sciences tools companies are improving. In recent months, biotechnology funding has been strong, biopharmaceutical R&D investment has been stable, and we think the agreements reached between the pharmaceutical industry and the Trump Administration on drug pricing reduces the risk of industry disruption, clearing the path for continued biopharmaceutical R&D investment. Last quarter, management provided a reasonable framework for thinking about how the business could grow over the next few years. Management thinks end markets will gradually build from the lower growth environment that the company has been navigating, leading to a 2026 and 2027 scenario where the company will deliver 3% to 6% organic revenue growth. In that scenario, through strong cost management, management believes the company can deliver mid-to-high single-digit adjusted operating income growth, and with capital deployment, even better earnings growth. Beyond 2027, given the long-term drivers of the life sciences tools industry remain compelling, management believes the company can deliver 7%-plus organic revenue growth. We think Thermo Fisher is a competitively advantaged business trading at a reasonable valuation with growth expected to accelerate after a challenging multi-year period."

Thermo Fisher Scientific Inc. (NYSE:TMO) is in 26th position on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 121 hedge fund portfolios held Thermo Fisher Scientific Inc. (NYSE:TMO) at the end of the third quarter, up from 117 in the previous quarter. For Q4 2025, Thermo Fisher Scientific Inc. (NYSE:TMO) reported revenue totaling $12.21 billion, up 7% compared with the same period last year. While we acknowledge the potential of Thermo Fisher Scientific Inc. (NYSE:TMO) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Thermo Fisher Scientific Inc. (NYSE:TMO) and shared a bullish thesis on the company. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.