Is Thermo Fisher Scientific (TMO) One of the Best Falling Stocks to Buy According to Analysts?
19min read Thermo Fisher Scientific (TMO), a global leader in life sciences, diagnostics, and analytical instruments, has faced headwinds in recent quarters, including post-pandemic demand normalization and macroeconomic pressures. Yet, despite its stock price dipping to $424.24 in early 2025—down from a 2024 high of $650—analysts remain cautiously optimistic about its long-term prospects. Is this a rare opportunity to buy a high-quality stock at a discount? Let’s dissect the data.
Analyst Sentiment: A "Moderate Buy" Consensus, but Bulls Are Patient
As of April 2025, analysts maintained a “Moderate Buy” consensus (based on a normalized score of 2.86/4.0), with 17 of 21 analysts recommending Buy or Strong Buy ratings. Key players like UBS, RBC Capital, and Wells Fargo reaffirmed their bullish stance, citing TMO’s diversified revenue streams and strategic acquisitions.
The 12-month average price target of $653.72 implies a 54% upside from April 2025 lows, suggesting analysts believe the dip is temporary. Notably, Royal Bank of Canada and Cowen remain aggressive bulls, with a $767 price target, while Wolfe Research’s $575 floor highlights cautious risks.
Financial Performance: Q1 2025 Beat Signals Resilience
TMO’s Q1 2025 results were a bright spot:
- Revenue rose to $10.36B, slightly exceeding estimates, driven by strong performance in its Biopharma Services and Genetic Sciences segments.
- Adjusted EPS hit $5.15, beating the $5.10 consensus.
CEO Mark Casper emphasized operational agility, including a $2B commitment to U.S. manufacturing and R&D to counter U.S.-China tariffs and geopolitical risks. The acquisition of Solventum’s purification business for $4.1B further underscores TMO’s focus on high-margin bioprocessing tools, a growth area amid rising demand for mRNA vaccines and cell therapies.
Bull Case: Structural Growth and Institutional Momentum
- Diversified Revenue: TMO’s four segments—Life Sciences Solutions, Analytical Instruments, Specialty Diagnostics, and Pharmaceutical Services—provide a stable revenue base. Even as post-pandemic demand for lab equipment wanes, its biopharma and diagnostics businesses are expanding.
- Strong Free Cash Flow: Historically, TMO generates ~$6B annual free cash flow, enabling share buybacks and acquisitions. Its 10–14% EPS CAGR since 2010 reflects disciplined execution.
- Institutional Ownership: Mutual funds and ETFs hold ~50% of TMO’s shares, signaling long-term confidence.
Bear Case: Near-Term Headwinds
- Trade Tensions: U.S.-China tariffs continue to pressure margins, with TMO’s 2023 revenue declining 4.5% due to pandemic demand normalization.
- Competitive Pressures: Companies like Danaher and Agilent are intensifying competition in life sciences tools.
- Valuation Concerns: TMO’s P/E ratio of 26.15 (as of April 2025) is elevated relative to its 5-year average of 23.5, raising questions about overvaluation.
Key Data Points to Watch
- 2025 Guidance: TMO forecasts $43.3–44.2B in revenue and $21.76–22.84 EPS, suggesting cautious optimism.
- Margin Recovery: Gross margins fell to 47% in 2023 from 51% in 2022; investors will monitor progress in 2024–2025.
- Acquisition Integration: The Solventum deal’s success could unlock $100M+ in synergies annually.
Conclusion: A Buy for the Long Term
Despite near-term volatility, TMO remains a strategic buy for investors with a 3–5 year horizon. Analysts’ $653.72 consensus target (54% upside) and the stock’s historical resilience in downturns justify the risk.
Key Takeaways:
- Value Proposition: TMO’s $767 high target (implying ~80% upside) reflects its dominance in a $200B life sciences tools market.
- Risks Mitigated: Tariffs and competition are factored into current valuations, making the stock a “bargain” at $424.
- Catalysts Ahead: Biopharma demand, AI-driven diagnostics, and U.S. manufacturing investments could drive a rebound.
In summary, TMO’s dip creates a rare entry point for investors willing to overlook short-term noise. With a fortress balance sheet, industry leadership, and a backlog of strategic moves, this is a stock to buy while others are selling.
