Thermo Fisher (TMO US) Summary
Core Content and Key Highlights
Thermo Fisher Scientific (TMO) reported strong second-quarter 2026 results, exceeding both revenue and adjusted earnings per share (EPS) expectations. The company raised its full-year guidance, reflecting confidence in future performance.
Financial Performance in 2Q26
- Revenue: Increased by 10.5% YoY to US$11.99bn, with organic growth of 5% YoY.
- Adj. EPS: Rose by 12.5% YoY to US$6.03, surpassing the Bloomberg consensus by 5.49%.
- Growth Trends:
- Pharma & Biotech: Mid-single-digit growth, with biotech activity showing a recovery in authorizations.
- Academic & Government: Returned to low-single-digit growth after a decline in Q1.
- Industrial & Applied, Diagnostics & Healthcare: Both saw mid-single-digit growth.
Guidance Update
- Full-Year Revenue Growth: Expected to be 6.4–8.0% YoY (previously 6.2–8.0%).
- Organic Revenue Growth: Targeted at the upper end of 3–4%.
- Adj. EPS Growth: Anticipated at 9.0–10.8% (previously 7.7–9.8%).
Key Drivers of Growth
Bioproduction and Analytical Instruments
- Bioproduction: Continued strong organic growth, with leadership in cell culture media and single-use technologies.
- Solventum Acquisition: Enhanced purification and filtration capabilities, contributing to growth.
- DynaDrive Bioreactors: Becoming standardized in the CDMO industry, driving downstream demand.
- Analytical Instruments: Organic growth of 7%, led by electron microscopy with strong demand from semiconductor and advanced materials.
- Segment Margin: Increased by 420 basis points to 23.0%.
Pharma & Biotech Demand
- Clinical Research (PPD): Strong revenue and authorizations growth.
- Biotech Activity: Improved authorizations and revenue growth, indicating funding recovery.
- Integrated Drug Development: The CDMO + CRO offering is resonating with biotech customers.
- Clario Consolidation: Delivered a strong first full quarter, with revenue synergies.
- Pharma Services (Patheon): Modest growth in 1H26, with a step-up expected in 2H26.
Financial Forecasts and Valuation
Forecasted Financials (2026E–2028E)
| Metric |
FY26E (US$ mn) |
FY27E (US$ mn) |
FY28E (US$ mn) |
| Revenue |
48,036 |
50,924 |
54,410 |
| Adj. Net Profit |
9,210 |
9,615 |
10,464 |
| Adj. EPS |
25.01 |
26.49 |
28.83 |
| YoY Growth (Adj. EPS) |
9.4% |
5.9% |
8.8% |
Valuation and Target Price
- Target Price (TP): Raised from US$620 to US$660 based on a 10-year DCF model with WACC of 8.16% and terminal growth of 2.0%.
- Current Price: US$568.26.
- Price Target Up/Downside: 16.1%.
- P/E (Adj.): Projected to decrease from 26.0 in FY24A to 19.7 in FY28E.
DCF Valuation (2026E–2035E)
| Year |
EBIT (US$ bn) |
EBIT*(1-tax rate) (US$ bn) |
+ D&A (US$ bn) |
- Change in WC (US$ bn) |
- Capex (US$ bn) |
FCFF (US$ bn) |
| 2026E |
8.7 |
7.8 |
3.1 |
-1.2 |
-12.0 |
-2.3 |
| 2027E |
9.1 |
8.2 |
3.2 |
-0.7 |
-6.0 |
4.7 |
| 2028E |
10.1 |
9.0 |
3.2 |
-0.9 |
-6.0 |
5.3 |
| 2029E |
12.0 |
10.8 |
3.7 |
-1.0 |
-6.0 |
7.4 |
| 2030E |
14.2 |
12.7 |
4.2 |
-1.1 |
-6.0 |
9.8 |
| 2031E |
16.7 |
15.0 |
4.9 |
-1.3 |
-6.0 |
12.6 |
| 2032E |
19.6 |
17.7 |
5.6 |
-1.5 |
-6.0 |
15.7 |
| 2033E |
23.0 |
20.7 |
6.3 |
-1.7 |
-6.0 |
19.3 |
| 2034E |
26.8 |
24.1 |
7.2 |
-1.9 |
-6.0 |
23.3 |
| 2035E |
31.0 |
27.9 |
8.1 |
-2.2 |
-6.0 |
27.8 |
| Terminal Value |
|
|
|
|
|
461.1 |
Valuation Range Based on Sensitivity Analysis
| Terminal Growth Rate |
Price per Share (US$) |
| 3.0% |
1,039.27 |
| 2.5% |
934.59 |
| 2.0% |
850.19 |
| 1.5% |
780.70 |
| 1.0% |
722.50 |
Analyst Recommendations
- Rating: BUY (Maintained).
- Target Price: US$660.00.
- Reasoning: Reflects the net contribution of Clario consolidation and divestiture of microbiology business, along with improved demand outlook.
Shareholding and Performance
Shareholding Structure
- Vanguard: 9.2%
- BlackRock: 8.2%
Share Performance
| Period |
Absolute Return (%) |
Relative Return (%) |
| 1-mth |
15.5 |
14.6 |
| 3-mth |
21.0 |
17.0 |
| 6-mth |
-9.2 |
-15.3 |
12-Month Price Performance
- Chart: Available in the original document.
- Source: FactSet.
Profitability and Growth Metrics
Income Statement Highlights
| Metric |
2023A |
2024A |
2025A |
2026E |
2027E |
2028E |
| Revenue Growth (%) |
-4.6% |
0.1% |
3.9% |
7.8% |
6.0% |
6.8% |
| Adj. Net Profit Growth (%) |
-8.7% |
0.2% |
3.1% |
6.6% |
4.4% |
8.8% |
| Gross Margin (%) |
39.9% |
41.3% |
40.9% |
41.0% |
41.0% |
41.2% |
| Operating Margin (%) |
16.0% |
17.1% |
17.4% |
18.0% |
18.0% |
18.6% |
| Adj. Net Profit Margin (%) |
19.5% |
19.5% |
19.4% |
19.2% |
18.9% |
19.2% |
| ROE (%) |
13.2% |
13.2% |
13.0% |
13.1% |
12.6% |
13.2% |
Liquidity and Gearing
| Metric |
2023A |
2024A |
2025A |
2026E |
2027E |
2028E |
| Net Debt to Equity (x) |
0.6 |
0.5 |
0.6 |
0.7 |
0.6 |
0.6 |
| Current Ratio (x) |
1.8 |
1.7 |
1.9 |
1.6 |
1.6 |
1.7 |
| Receivable Turnover Days |
69.6 |
69.9 |
70.0 |
75.0 |
75.0 |
75.0 |
| Inventory Turnover Days |
76.0 |
73.0 |
72.1 |
72.1 |
72.1 |
72.1 |
| Payable Turnover Days |
44.3 |
43.1 |
46.5 |
46.5 |
46.5 |
46.5 |
Valuation Metrics
| Metric |
2023A |
2024A |
2025A |
2026E |
2027E |
2028E |
| P/E (Adj.) (x) |
26.4 |
26.0 |
24.9 |
22.7 |
21.4 |
19.7 |
| P/B (x) |
4.7 |
4.4 |
4.0 |
3.7 |
3.4 |
3.2 |
| P/CFPS (x) |
26.1 |
25.0 |
27.4 |
22.6 |
20.7 |
19.1 |
| Dividend Yield (%) |
0.2 |
0.3 |
0.3 |
0.3 |
0.4 |
0.4 |
Analyst Certification and Disclaimers
- The analyst certifies that the views expressed are personal and not influenced by compensation.
- The analyst does not trade in the stock within 30 days prior to the report and will not do so within 3 business days after.
- No conflicts of interest are assumed, and the report is not tailored to individual investors.
- CMBIGM does not guarantee accuracy, completeness, or timeliness of the information.
- The report is for intended recipients only and may not be reproduced or distributed without consent.
CMBIGM Ratings
- BUY: Potential return of over 15% over the next 12 months.
- HOLD: Potential return of +15% to -10%.
- SELL: Potential loss of over 10%.
- NOT RATED: No rating issued.
- OUTPERFORM: Industry expected to outperform the benchmark.
- MARKET-PERFORM: Industry expected to perform in line with the benchmark.
- UNDERPERFORM: Industry expected to underperform the benchmark.
CMB International Global Markets Limited
- A wholly owned subsidiary of CMB International Capital Corporation, which is itself a subsidiary of China Merchants Bank.
- Address: 45/F, Champion Tower, 3 Garden Road, Hong Kong.
- Contact: Tel: (852) 3900 0888, Fax: (852) 3900 0800.
Important Disclosures
- The report is not investment advice and should be used independently.
- CMBIGM does not assume liability for losses from reliance on the report.
- Information is based on publicly available data and is subject to change.
- CMBIGM may have conflicts of interest and may make proprietary investments inconsistent with the report's recommendations.
