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Is Thermo Fisher Stock Worth Holding on to in Your Portfolio?
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Thermo Fisher Scientific Inc.’s (TMO - Free Report) recent slew of product launches reflects its ongoing commitment to innovation. The company gains early insights into customer needs through its strong partnerships, fueling industry-leading solutions. Strategic acquisitions play an important role as well, expanding Thermo Fisher’s portfolio. Meanwhile, adverse macroeconomic impacts and a fierce competitive landscape may create operational challenges for the company.
In the past year, this Zacks Rank #3 (Hold) stock has rallied 6.4% compared with the industry’s 12.5% growth and the S&P 500 composite’s 26% rise.
The renowned medical and laboratory equipment provider has a market capitalization of $219.78 million. TMO’s earnings yield of 4.03% compares favorably to the industry’s -3.23%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.63%.
Let’s delve deeper.
Upsides for Thermo Fisher
Impressive Product Launches: Thermo Fisher has been actively enhancing its product offerings and strengthening its portfolio. In the third quarter of 2024, the company launched its new pre-transplant risk assessment assay to help assess the risk of early acute rejection in kidney transplant recipients. Earlier, Thermo Fisher unveiled the Scientific KingFisher PlasmidPro Maxi Processor (PlasmidPro) and Scientific One Lambda Laboratories — a new CXCL10 testing service. It also introduced the Thermo Scientific Stellar Mass Spectrometer to extend its leadership in proteomics.
In the bioproduction business, the company launched a first-of-its-kind bio-based film for single-use technologies. Within the laboratory products business, Thermo Fisher launched a new line of Energy Star-certified Thermo Scientific TSX universal series ULT freezers. 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 its investment in R&D.
Image Source: Zacks Investment Research
Advancing Collaborations and Partnerships: A key pillar of Thermo Fisher’s growth strategy is the trusted partner status it has built with customers, which allows the company to understand their unmet needs early and bring differentiated products, services and expertise. In lieu of this, during the third quarter, the company expanded its pharma services manufacturing footprint in Cincinnati, OH, and Bend, OR. Within the clinical research business, Thermo Fisher expanded its global laboratory services network with a new bioanalytical lab in Gothenburg, Sweden, to support pharmaceutical and biotech customers with advanced laboratory services.
Additionally, earlier this year, the company collaborated with Bayer to develop a next-generation sequencing-based companion diagnostic. Also, within the analytical instruments business, it partnered with the North Carolina Collaboratory to support PFAS research capacity. Thermo Fisher improved its supply chain in Asia-Pacific by optimizing inventory across its network. While in Europe, the company streamlined and automated its manufacturing processes for high-end analytical instruments to meet strong demand.
Strategic Acquisitions to Boost Growth: Thermo Fisher’s business strategy primarily includes expansion through the strategic acquisition of technologies and businesses that augment the company’s existing products and services. A few of its recent strategic acquisitions that are likely to drive future growth include the $3.1 billion acquisition of Olink Holdings. The acquisition, closed in the third quarter, is strategically enhancing Thermo Fisher’s capabilities in the high-growth proteomics market with the addition of highly differentiated solutions. Through acquisitions, the company expects to deliver $125 million in adjusted operating income synergies in year five, driven by revenue synergies and cost efficiencies.
Among the significant acquisitions of 2023, the CorEvitas buyout advanced Thermo Fisher’s clinical research capabilities with a leading regulatory-grade registry platform. Meanwhile, the acquisition of MarqMetrix has added highly complementary Raman-based in-line PAT to the company’s portfolio.
Concerns for Thermo Fisher
Macroeconomic Challenges Continue to Weigh on the Stock: The industry-wide trend of difficult macroeconomic conditions in the form of geopolitical pressure leading to disruptions in economic activity, global supply chains and labor markets is creating a challenging business environment for Thermo Fisher. 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, TMO may struggle to keep its operating expenses in check.
Tough Competitive Pressure: Due to 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 the company’s 2024 earnings per share (EPS) has moved up 1 cent to $21.69 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $42.73 billion. This suggests a 0.3% drop from the year-ago reported number.
Veracyte has an estimated 2024 earnings growth rate of 37.2% compared with the industry’s 15.3%. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 520.6%. Its shares have surged 70.3% compared with the industry’s 12.5% growth in the past year.
Phibro Animal Health, sporting a Zacks Rank #1 at present, has an estimated earnings growth rate of 35.3% for fiscal 2025 compared with the industry’s 11.1%. Shares of the company have surged 99.1% compared with the industry’s 16.6% growth over the past year. PAHC’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 25.47%.
Haemonetics, carrying a Zacks Rank #2 (Buy) at present, has an estimated fiscal 2025 earnings growth rate of 15.9% compared with the industry’s 12.3%. Shares of the company have declined 10.9% against the industry’s 16.6% growth. HAE’s earnings surpassed estimates in three of the trailing four quarters and missed on one occasion, with the average surprise being 2.82%.
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Is Thermo Fisher Stock Worth Holding on to in Your Portfolio?
Thermo Fisher Scientific Inc.’s (TMO - Free Report) recent slew of product launches reflects its ongoing commitment to innovation. The company gains early insights into customer needs through its strong partnerships, fueling industry-leading solutions. Strategic acquisitions play an important role as well, expanding Thermo Fisher’s portfolio. Meanwhile, adverse macroeconomic impacts and a fierce competitive landscape may create operational challenges for the company.
In the past year, this Zacks Rank #3 (Hold) stock has rallied 6.4% compared with the industry’s 12.5% growth and the S&P 500 composite’s 26% rise.
The renowned medical and laboratory equipment provider has a market capitalization of $219.78 million. TMO’s earnings yield of 4.03% compares favorably to the industry’s -3.23%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.63%.
Let’s delve deeper.
Upsides for Thermo Fisher
Impressive Product Launches: Thermo Fisher has been actively enhancing its product offerings and strengthening its portfolio. In the third quarter of 2024, the company launched its new pre-transplant risk assessment assay to help assess the risk of early acute rejection in kidney transplant recipients. Earlier, Thermo Fisher unveiled the Scientific KingFisher PlasmidPro Maxi Processor (PlasmidPro) and Scientific One Lambda Laboratories — a new CXCL10 testing service. It also introduced the Thermo Scientific Stellar Mass Spectrometer to extend its leadership in proteomics.
In the bioproduction business, the company launched a first-of-its-kind bio-based film for single-use technologies. Within the laboratory products business, Thermo Fisher launched a new line of Energy Star-certified Thermo Scientific TSX universal series ULT freezers. 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 its investment in R&D.
Image Source: Zacks Investment Research
Advancing Collaborations and Partnerships: A key pillar of Thermo Fisher’s growth strategy is the trusted partner status it has built with customers, which allows the company to understand their unmet needs early and bring differentiated products, services and expertise. In lieu of this, during the third quarter, the company expanded its pharma services manufacturing footprint in Cincinnati, OH, and Bend, OR. Within the clinical research business, Thermo Fisher expanded its global laboratory services network with a new bioanalytical lab in Gothenburg, Sweden, to support pharmaceutical and biotech customers with advanced laboratory services.
Additionally, earlier this year, the company collaborated with Bayer to develop a next-generation sequencing-based companion diagnostic. Also, within the analytical instruments business, it partnered with the North Carolina Collaboratory to support PFAS research capacity. Thermo Fisher improved its supply chain in Asia-Pacific by optimizing inventory across its network. While in Europe, the company streamlined and automated its manufacturing processes for high-end analytical instruments to meet strong demand.
Strategic Acquisitions to Boost Growth: Thermo Fisher’s business strategy primarily includes expansion through the strategic acquisition of technologies and businesses that augment the company’s existing products and services. A few of its recent strategic acquisitions that are likely to drive future growth include the $3.1 billion acquisition of Olink Holdings. The acquisition, closed in the third quarter, is strategically enhancing Thermo Fisher’s capabilities in the high-growth proteomics market with the addition of highly differentiated solutions. Through acquisitions, the company expects to deliver $125 million in adjusted operating income synergies in year five, driven by revenue synergies and cost efficiencies.
Among the significant acquisitions of 2023, the CorEvitas buyout advanced Thermo Fisher’s clinical research capabilities with a leading regulatory-grade registry platform. Meanwhile, the acquisition of MarqMetrix has added highly complementary Raman-based in-line PAT to the company’s portfolio.
Concerns for Thermo Fisher
Macroeconomic Challenges Continue to Weigh on the Stock: The industry-wide trend of difficult macroeconomic conditions in the form of geopolitical pressure leading to disruptions in economic activity, global supply chains and labor markets is creating a challenging business environment for Thermo Fisher. 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, TMO may struggle to keep its operating expenses in check.
Tough Competitive Pressure: Due to 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 the company’s 2024 earnings per share (EPS) has moved up 1 cent to $21.69 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $42.73 billion. This suggests a 0.3% drop from the year-ago reported number.
Key MedTech Stocks
Some better-ranked stocks in the broader medical space are Veracyte (VCYT - Free Report) , Phibro Animal Health (PAHC - Free Report) and Haemonetics (HAE - Free Report) .
Veracyte has an estimated 2024 earnings growth rate of 37.2% compared with the industry’s 15.3%. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 520.6%. Its shares have surged 70.3% compared with the industry’s 12.5% growth in the past year.
VCYT 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, sporting a Zacks Rank #1 at present, has an estimated earnings growth rate of 35.3% for fiscal 2025 compared with the industry’s 11.1%. Shares of the company have surged 99.1% compared with the industry’s 16.6% growth over the past year. PAHC’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 25.47%.
Haemonetics, carrying a Zacks Rank #2 (Buy) at present, has an estimated fiscal 2025 earnings growth rate of 15.9% compared with the industry’s 12.3%. Shares of the company have declined 10.9% against the industry’s 16.6% growth. HAE’s earnings surpassed estimates in three of the trailing four quarters and missed on one occasion, with the average surprise being 2.82%.