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

Thermo Fisher Scientific Inc. TMO focuses on expanding through the acquisition of technologies and businesses that augment its existing products and services. The company continues to enhance its portfolio through a slew of product launches. Further, solid financial health adds to the stock’s appeal. Meanwhile, the adverse impacts of macroeconomic volatilities and foreign currency exchange raise concerns for Thermo Fisher’s operations.

In the past year, this Zacks Rank #3 (Hold) stock has rallied 20.6% compared to the industry’s 11.3% decline and the S&P 500 composite’s 10.2% gain.

The renowned medical and laboratory equipment provider has a market capitalization of $158.1 billion. TMO has an earnings yield of 5.3% compared to the industry’s -2.8%. The company’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 2.3%.

Let’s delve deeper.

Upsides for TMO Stock

Strategic Acquisitions to Boost Growth: A recent strategic acquisition that is likely to drive the company’s future growth includes the $4.1 billion acquisition of Solventum’s Purification & Filtration business in the first quarter of 2025. The acquisition is set to enhance Thermo Fisher’s capabilities in the development and manufacturing of biologics, spanning upstream and downstream workflows. Through acquisition, TMO expects to deliver $125 million in adjusted operating income synergies in the next five years, driven by revenue synergies and cost efficiencies. Another major acquisition recently made by the company is Olink. The buyout advanced Thermo Fisher’s capabilities in the high-growth proteomics market by adding highly differentiated solutions. 

Impressive Product Launch: In the first quarter of 2025, Thermo Fisher launched the international CorEvitas Adolescent Alopecia Areata Registry, addressing a critical unmet need for real-world, adolescent-specific evidence and data related to this autoimmune disease. Additionally, the company also launched the Invitrogen EVOS S1000 Spatial Imaging System, featuring intuitive software that empowers researchers to achieve more with their tissue samples while reducing sample processing time. Within the laboratory products business, Thermo Fisher launched new lines of floor-model centrifuges -— Thermo Scientific Cryofuge, Thermo Scientific BIOS and Thermo Scientific LYNX.

The company’s spree of innovation and portfolio-strengthening process requires a major thrust on R&D. In recent years, Thermo Fisher has gradually ramped up investments in R&D. Our model estimates that R&D expenses will increase 51.1% in the second quarter of 2025.

Stable Solvency: With a long-term debt of $31.37 billion as of March 29, 2025, Thermo Fisher looks quite comfortable from the liquidity point of view. The company’s cash and cash equivalents and short-term investments totaled $5.95 billion at the end of the first quarter of 2025. However, Thermo Fisher had $2.82 billion of current debt on its balance sheet, much lower than the cash and cash equivalent level. The times interest earned ratio was 6.3%, up 0.3% from the previous quarter’s level. The current dividend payout ratio is 7.3%.

What Ails Thermo Fisher?

Macroeconomic Challenges Continue to Weigh on the Stock: Thermo Fisher is navigating a tough business environment shaped by broader macroeconomic challenges. Geopolitical tension, such as the Russia-Ukraine war, is disrupting global supply chains, labor markets and overall economic activity. 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. With sustained macroeconomic pressures, Thermo Fisher may struggle to keep its operating expenses in check.

Exposure to Foreign Currency: International markets contribute a substantial portion of Thermo Fisher’s revenues, and the company intends to continue expanding its presence in these regions. International revenues and costs are subject to the risk that fluctuations in exchange rates could adversely affect a company’s reported revenues and profitability when translated into U.S. dollars for financial reporting purposes. As Thermo Fisher’s international sales grow, exposure to fluctuations in currency exchange rates could have a larger effect on its financial results. In the first quarter of 2025, currency translation had an unfavorable effect of 1% on revenues due to the strengthening of the U.S. dollar relative to other currencies in which the company sells products and services.

TMO Stock Estimate Trend

The Zacks Consensus Estimate for Thermo Fisher’s earnings per share (EPS) has moved up 1 cent to $22.34 in the past 30 days.

The Zacks Consensus Estimate for the company’s 2025 revenues is pegged at $43.71 billion. This suggests a 1.9% rise from the year-ago reported number.

Key Picks

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

Phibro Animal Health has an estimated long-term earnings growth rate of 26% compared with the industry’s 15.7%. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 30.6%. Its shares have rallied 75.8% compared with the industry’s 13.1% 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.

Cardinal Health, currently carrying a Zacks Rank #2 (Buy), has an estimated long-term earnings growth rate of 10.9% compared with the industry’s 9.9% growth. Shares of the company have surged 71.3% compared with the industry’s modest 12.3% gain. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 10.3%.

Cencora, carrying a Zacks Rank #2 at present, has an earnings yield of 5.3% compared with the industry’s 3.7%. Shares of the company have rallied 34.1% against the industry’s 15.4% decline. COR’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 6%.

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

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