20260202-招银国际-4Q25_results_Capitalizing_on_the_growing_pharmaceutical_demand_7页_665kb

Thermo Fisher (TMO US) 4Q25 Performance and Outlook Summary

Core Content

Thermo Fisher Scientific (TMO US) reported strong performance in the fourth quarter of 2025, with revenue increasing by 7.2% YoY and adjusted EPS rising by 7.7% YoY, surpassing Bloomberg's consensus estimates. This growth was driven by robust performance across its bioproduction, research, safety channel, analytical instruments, and CDMO services segments. The company has also initiated its 2026 full-year guidance, expecting revenue growth of 3.9% to 5.9% YoY and adjusted EPS growth of 5.9% to 8.4% YoY.

Thermo Fisher maintains a BUY rating with a new target price of US$670, up from the previous US$654, based on a 10-year DCF model with a WACC of 8.16% and a terminal growth rate of 2.0%. The company's long-term organic revenue growth target remains at 3% to 6%, indicating a positive outlook for future performance.

Main Points

• 4Q25 Performance:

  • Revenue up 7.2% YoY, fastest quarterly growth in 2025.
  • Adjusted EPS up 7.7% YoY, beating Bloomberg consensus by 2.2% and 1.9%, respectively.

• Pharmaceutical Demand:

  • Pharma and biotech customers were the strongest segments in 2025, contributing to mid-single-digit revenue growth for the year and high-single-digit growth in 4Q25.
  • Biotech financing recovery in the second half of 2025 led to increased confidence and R&D spending.
  • Despite budget constraints in US governmental and academic clients, pharmaceutical demand for innovative instruments remains strong.

• Strategic Acquisitions:

  • Acquired Solventum's filtration & separation business for US$4.0bn and Sanofi's sterile fill-finish facility in New Jersey.
  • Announced intention to acquire Clario, a clinical endpoint data services provider, for US$8.9bn.
  • These acquisitions aim to enhance core competencies, expand DP capacity in the U.S., and support onshore production demands amid geopolitical uncertainties.

• CDMO and Clinical CRO Growth:

  • CDMO segment saw strong growth due to global constraints on sterile fill-finish capacity.
  • Clinical CRO improved sequentially with mid-single-digit revenue growth in 4Q25, and order growth outpacing revenue growth.
  • The integrated Accelerator business aims to improve project execution and shorten time-to-market for innovative drugs.

• Financial Outlook:

  • Revenue growth forecast for 2026E/27E/28E is 5.1% / 6.5% / 6.7% YoY.
  • Adjusted EPS growth forecast is 7.4% / 8.9% / 9.4% YoY.
  • Adjusted net profit is expected to grow to US$9,130mn in 2026E, with non-GAAP EPS at US$24.55.

Key Financial Metrics

Valuation Analysis

• DCF Valuation (in US$bn):

  • 2026E: 278.8
  • Terminal Value: 446.4
  • Terminal Growth Rate: 2.00%
  • WACC: 8.16%

• Valuation Range Based on Sensitivity Analysis:

  • At a WACC of 8.16%, the target price is US$670.
  • At a WACC of 7.16%, the price is US$1,033.97.
  • At a terminal growth rate of 2.0%, the price is US$670.
  • At a terminal growth rate of 1.5%, the price is US$730.29.

Share Performance

• Current Price: US$578.61
• 12-month Price Performance:
  • Absolute: 21.2%
  • Relative: 11.2%

Analyst Notes

• Equity Beta: Increased from 1.0 to 1.2, reflecting rising volatility.
• Valuation Drivers: Continued positive demand trends, strategic acquisitions, and improved operational efficiency.
• Outlook: Maintained BUY rating due to positive outlook on growth and favorable valuation.

Summary

Thermo Fisher Scientific is positioned for sustained growth in 2026, driven by strong performance in the pharmaceutical sector, strategic acquisitions, and improved operational capabilities. The company's revenue and EPS growth forecasts are optimistic, with a target price of US$670 reflecting positive valuation and strong market performance. Despite some margin pressures, the long-term growth outlook remains positive, with increased onshore production demand and strong R&D spending expected to continue driving revenue and profitability.