Key takeaways
View moreDespite near-term headwinds from tariffs and policy changes, TMO's valuation metrics (EV/EBITDA of 20.25x vs industry 37.47x) suggest significant undervaluation relative to peers. The company maintains strong profitability metrics and market leadership position, while strategic investments and acquisitions provide credible growth catalysts that appear inadequately reflected in current valuation.
- Thermo Fisher Scientific's revenue growth is decelerating, with revenue decreasing from $11.395 billion in Q4 2024 to $10.364 billion in Q1 2025, indicating potential challenges in maintaining top-line growth.
- The company's liquidity position is weaker than the industry average, with a current ratio of 1.77 in Q1 2025 compared to an industry average of 4.32, suggesting potential short-term financial challenges.
- Despite these challenges, Thermo Fisher Scientific maintains strong profitability metrics compared to industry averages, with an ROA of 6.64% in Q1 2025 compared to an industry average of -38.48%.
- Management has updated the 2025 guidance to reflect the impact of tariffs and changes driven by US policy focus, with revenue in the range of $43.3 billion to $44.2 billion and adjusted EPS in the range of $21.76 to $22.84.
- Thermo Fisher Scientific has underperformed its peer companies, IDEXX Laboratories (IDXX) and Agilent Technologies (A), across most performance metrics, with a YTD performance of -21.76% compared to IDXX at 26.84%.
- The company is focused on high-impact innovation, strengthening its trusted partner status with customers, and leveraging its commercial engine, including the acquisition of SOVENTUM's purification and filtration business for $4.1 billion.
- The earnings call highlighted that tariffs and policy changes present significant headwinds, requiring aggressive mitigation actions, including increasing investment in US manufacturing and R&D.
- The maximum drawdown for TMO was -40.5% on 05/23/2025, indicating a higher risk profile with the potential for more significant losses from peak values.
- The company's Enterprise Value to EBITDA was 20.25 as of March 31, 2025, compared to an industry average of 37.47, suggesting that TMO is undervalued compared to its industry peers.
Evaluation summary
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Company Overview:
- Thermo Fisher Scientific, Inc. (TMO) provides analytical instruments, equipment, reagents, consumables, software, and services for research, analysis, discovery, and diagnostics.
- The company operates through four segments: Life Sciences Solutions, Analytical Instruments, Specialty Diagnostics, and Laboratory Products and Biopharma Services. Key products include reagents, instruments, and consumables used in biological and medical research, diagnostic test kits, and laboratory equipment.
- TMO's peers for comparative analysis include IDEXX Laboratories, Inc. (IDXX) and Agilent Technologies, Inc. (A). The Health Care Select Sector SPDR Fund (XLV) is used as a benchmark.
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Financial Performance:
- Revenue has shown a decreasing trend over the last four quarters, from $11.395 billion in Q4 2024 to $10.364 billion in Q1 2025.
- Net income also decreased from $1.830 billion in Q4 2024 to $1.507 billion in Q1 2025.
- Gross profit margin was 40.96% in Q1 2025, compared to 39.20% in Q4 2024, showing a slight improvement.
- Net profit margin was 14.54% in Q1 2025, lower than the 16.06% in Q4 2024.
- Return on Average Assets (ROA) was 6.64% in Q1 2025, compared to an industry average of -38.48%.
- Return on Average Total Equity (ROE) was 13.73% in Q1 2025, compared to an industry average of -144.83%.
- Return on Average Total Capital was 9.44% in Q1 2025, compared to an industry average of -48.07%.
- These metrics indicate that TMO is significantly more profitable than the industry average, despite recent declines in revenue and net income.
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Operational Efficiency:
- Total current assets decreased from $25.476 billion in Q2 2024 to $23.378 billion in Q1 2025.
- Total current liabilities decreased from $14.772 billion in Q2 2024 to $13.174 billion in Q1 2025.
- Working capital decreased from $10.704 billion in Q2 2024 to $10.204 billion in Q1 2025.
- Net operating cash flow decreased significantly from $3.290 billion in Q4 2024 to $723 million in Q1 2025.
- Free cash flow margin was 0.03 in Q1 2025, down from 0.25 in Q4 2024.
- Capital expenditure was $362 million in Q1 2025. Depreciation, depletion, and amortization were $705 million in the same period.
- The company paid $149 million in cash dividends in Q1 2025 and repurchased $1 billion of shares.
- The current ratio was 1.77 in Q1 2025, lower than the industry average of 4.32.
- The quick ratio was 1.38 in Q1 2025, lower than the industry average of 3.67.
- Total debt to total equity ratio was 69.22% in Q1 2025, lower than the industry average of 166.02%.
- Debt / EBITDA was 3.18 in Q1 2025, lower than the industry average of 3.88.
- These metrics suggest that while TMO has a manageable debt burden, its liquidity position is weaker than the industry average.
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Growth Opportunities:
- Thermo Fisher Scientific is focused on high-impact innovation, strengthening its trusted partner status with customers, and leveraging its commercial engine.
- The company announced the acquisition of SOVENTUM's purification and filtration business for $4.1 billion.
- They are investing approximately $2 billion in US manufacturing and R&D.
- The company is expanding capabilities in the high-growth proteomics market through the acquisition of Olink Holding AB.
- Management is actively managing the business to mitigate the impact of macro changes and capitalize on new opportunities, including increasing investment in US manufacturing and R&D.
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Recent Developments and Market Sentiment:
- The earnings call highlighted that tariffs and policy changes present significant headwinds, requiring aggressive mitigation actions.
- Management updated the 2025 guidance to reflect the impact of tariffs and changes driven by US policy focus, with revenue in the range of $43.3 billion to $44.2 billion and adjusted EPS in the range of $21.76 to $22.84.
- The updated guidance incorporates a $0.70 EPS headwind from US-China tariffs and a $0.30 EPS headwind from changes in US policy focus.
- Analysts are focused on the guidance methodology, long-term market growth, biopharma end market, manufacturing flexibility, and policy changes.
- The company is actively managing its cost base and supply chain to mitigate the impact of tariffs.
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Risks and Threats:
- Risks related to technological change, competition, economic conditions, and customer/government spending are significant.
- Operational risks such as cybersecurity incidents, supply chain disruptions, and talent retention challenges exist.
- Legal and regulatory risks, including product liability claims, environmental matters, and compliance with government contracts, pose a threat.
- Financial risks including tax matters, debt obligations, and currency exchange rate fluctuations are present.
- The company faces potential for reduced trade between the US and China due to tariffs.
- Changes in government funding could impact US academic and government customers.
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Valuation Analysis:
- Enterprise Value to EBITDA was 20.25 as of March 31, 2025, compared to an industry average of 37.47.
- Enterprise Value to Sales was 5.08 as of March 31, 2025, compared to an industry average of 14.43.
- These metrics suggest that TMO is undervalued compared to its industry peers.
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Price Performance:
- Thermo Fisher Scientific (TMO) has generally underperformed both IDEXX Laboratories (IDXX) and Agilent Technologies (A) across various time periods.
- The YTD performance shows TMO at -21.76% compared to IDXX at 26.84% and A at -12.32%.
- The 3-year performance shows TMO at -21.85% compared to IDXX at 49.93% and A at -1.1%.
- TMO has also underperformed the Health Care Select Sector SPDR Fund (XLV) across most metrics.
- The maximum drawdown for TMO was -40.5% on 05/23/2025.
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Future Outlook:
- Management updated the 2025 guidance to reflect the impact of tariffs and changes driven by US policy focus, with revenue in the range of $43.3 billion to $44.2 billion and adjusted EPS in the range of $21.76 to $22.84.
- The company expects to mitigate the tariff impact fully in the following year.
- Analysts are focused on the guidance methodology, long-term market growth, biopharma end market, manufacturing flexibility, and policy changes.
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Summary:
- Thermo Fisher Scientific is a leading provider of scientific instruments and services, with strong profitability metrics compared to industry averages.
- Strengths: High gross profit margin, strong ROA, ROE, and ROIC compared to industry averages, strategic acquisitions, and management's focus on mitigating headwinds.
- Weaknesses: Decelerating revenue growth, decreasing net income, weaker liquidity position compared to the industry average, and underperformance compared to peers and benchmarks.
- Opportunities: Market expansion through acquisitions, investment in US manufacturing and R&D, and leveraging the PPI business system.
- Threats: Tariffs and policy changes, technological change, competition, economic conditions, and regulatory risks.
- Overall, TMO's financial health is stable, but the company faces challenges related to revenue growth, liquidity, and market sentiment. Key factors for future performance include the successful integration of acquisitions, effective mitigation of tariff impacts, and improvement in liquidity ratios. Areas requiring further monitoring include revenue growth rates, gross margin, operating margin, and net margin. TMO presents a mixed investment profile, with strong profitability balanced against growth and liquidity concerns.
Price history
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Fundamentals
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Insights
- Thermo Fisher Scientific's revenue growth is decelerating, and operating expenses are increasing, which is impacting overall profitability.
- The company's liquidity position is weaker than the industry average, suggesting potential short-term financial challenges.
- Despite these challenges, Thermo Fisher Scientific maintains a strong solvency position and efficient asset utilization.
- The company's profitability ratios are higher than the industry average, indicating efficient profit generation.
- Management needs to focus on revitalizing revenue growth, improving cost management, and enhancing liquidity to ensure sustainable financial performance.
Analysis
- Revenue
- Revenue growth is decelerating, indicating potential challenges in maintaining top-line growth.
- Sales/revenue decreased in the most recent quarter, reflecting potential market headwinds or competitive pressures.
- The company needs to focus on strategies to revitalize revenue growth, such as new product launches, market expansion, or pricing strategies.
- Profitability
- Operating and net income have decreased, reflecting lower overall profitability.
- Gross profit margin is higher than the industry average, indicating efficient production and cost management.
- Net profit margin and EBITDA margin are higher than the industry average, reflecting strong overall profitability.
- The company needs to improve cost management and operational efficiency to enhance profitability.
- Liquidity
- The current ratio is lower than the industry average, suggesting potential liquidity challenges.
- The quick ratio is lower than the industry average, indicating potential short-term liquidity concerns.
- The company needs to improve its liquidity position to meet short-term obligations.
- Solvency
- The total debt to total equity ratio is lower than the industry average, indicating a lower level of financial leverage.
- Debt / EBITDA is lower than the industry average, suggesting a manageable debt burden.
- The company maintains a stable long-term solvency position.
- Operational Efficiency
- Asset utilization is efficient, as evidenced by the steady growth in accounts receivable and stable inventory levels.
- Cash flow generation is strong relative to debt obligations.
- The company needs to improve its free cash flow margin to enhance operational efficiency.
- Cash Flow Analysis - Net operating cash flow has decreased in the most recent quarter, indicating potential challenges in core business operations. - Capital expenditures have remained relatively stable, reflecting ongoing investments in infrastructure. - The company needs to improve its cash flow management to support future growth and shareholder returns.
- Risk Factors
- The decelerating revenue growth and increasing operating expenses suggest that the company may be facing challenges in maintaining its historical growth trajectory.
- The decline in operating and net income indicates a decrease in overall profitability, which could be a cause for concern.
- The lower-than-industry-average current and quick ratios suggest potential liquidity challenges.
- Future Outlook
- Future income statement performance will depend on the company's ability to revitalize revenue growth, improve cost management, and effectively integrate acquisitions.
- Key metrics to monitor include revenue growth rates, gross margin, operating margin, and net margin.
- The potential impact of announced strategic initiatives on future earnings should be carefully evaluated.
- Profitability
Financial statements
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Public filings
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- Thermo Fisher Scientific is a diversified life sciences and analytical instruments company with leading market positions across its four business segments.
- The company is navigating a challenging macroeconomic environment, with moderation in COVID-19 related demand and inflationary pressures impacting profitability, though it is mitigating these headwinds through productivity improvements.
- Thermo Fisher continues to invest in high-impact innovation, strategic acquisitions, and capacity expansion to drive long-term growth, while maintaining a strong financial position with ample liquidity.
- Key risks include technological change, competition, economic conditions, regulatory changes, legal/compliance matters, and operational challenges such as cybersecurity and talent retention.
- Management's focus on operational excellence, cost discipline, and strategic capital allocation positions the company well to navigate the current environment and capitalize on long-term growth opportunities.
Core Business and Operations:
- Thermo Fisher Scientific Inc. is the world leader in serving science, enabling customers to make the world healthier, cleaner and safer
- The company operates in four business segments: Life Sciences Solutions, Analytical Instruments, Specialty Diagnostics, and Laboratory Products and Biopharma Services
- Key products and services include reagents, instruments, consumables, and outsourced services for pharmaceutical, biotech, academic, government, industrial, and healthcare customers
- Major competitors include a broad range of manufacturers, third-party distributors, and service providers
Industry and Market Trends:
- The company operates in markets characterized by rapid technological change, evolving industry standards, and competitive pressures
- Demand for products and services is affected by general economic conditions, capital spending policies of customers, and government funding policies
- The company faces risks from international operations, including currency fluctuations, geopolitical instability, and supply chain disruptions
- Regulatory changes, such as drug pricing policies, can impact demand for the company's products and services
Recent Events:
- Acquired Olink Holding AB, a provider of proteomics solutions, to expand capabilities in the high-growth proteomics market
- Entered into an agreement to acquire Solventum Corporation's Purification & Filtration business for $4.1 billion
- Implemented restructuring actions to streamline operations, including facility consolidations and headcount reductions
Risk Factors:
- Risks related to technological change, competition, economic conditions, and customer/government spending
- Operational risks such as cybersecurity incidents, supply chain disruptions, and talent retention challenges
- Legal and regulatory risks, including product liability claims, environmental matters, and compliance with government contracts
- Financial risks including tax matters, debt obligations, and currency exchange rate fluctuations
Legal Matters:
- Involved in various disputes, investigations, and litigation related to product liability, intellectual property, employment, and commercial issues
- Accrued amounts for environmental remediation, product liability, and other legal matters based on management's estimates
Management's Discussion and Analysis:
- Organic revenue growth impacted by moderation in COVID-19 related demand, macroeconomic conditions, and foreign exchange
- Profitability affected by unfavorable business mix, strategic investments, and inflation, partially offset by productivity improvements
- Strong cash flow generation enabled investments in acquisitions, capital expenditures, and share repurchases
- Liquidity remains robust with access to credit facilities and ability to transfer cash globally
Earnings calls
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Earnings Report 2025Q1 (2025-04-23)
Key takeaways
- Tariffs and Policy Changes Present Significant Headwinds: The updated guidance reflects a substantial impact from tariffs and policy changes, requiring aggressive mitigation actions.
- Manufacturing Flexibility is a Key Competitive Advantage: Thermo Fisher's scale and diverse manufacturing footprint provide a significant advantage in navigating the changing global trade landscape.
- Pharma Services Remains a Growth Driver: Despite some near-term headwinds, the pharma services business is expected to continue to be a key growth driver, particularly in fill-finish and drug product manufacturing.
- Long-Term Industry Fundamentals Remain Strong: Despite short-term uncertainties, management remains optimistic about the long-term health of the life science tools industry, driven by aging populations, healthcare demand, and scientific breakthroughs.
- Transparency in Guidance is Valued: Management's decision to provide detailed transparency regarding the impact of tariffs and policy changes is intended to help investors better understand and model the company's performance.
Focus of management’s prepared remarks
- Q1 2025 Financial Performance: Revenue was $10.36 billion, adjusted operating income was $2.27 billion, adjusted operating margin was 21.9%, and adjusted EPS was $5.15.
- Growth Strategy: The strategy consists of three pillars: high-impact innovation, trusted partner status with customers, and an unparalleled commercial engine.
- High-Impact Innovation: Highlights include the Thermo Scientific Vulcan automated lab for semiconductor manufacturing and the next-generation Thermo Scientific Transcend chromatography platform.
- Trusted Partner Status: Strengthening leadership in real-world evidence and collaborating with the Chan Zuckerberg Institute for Advanced Biological Imaging.
- PPI Business System: Emphasized as a significant competitive advantage, enabling share gains, improved quality, productivity, and customer allegiance.
- Capital Deployment: Announced the acquisition of SOVENTUM's purification and filtration business for $4.1 billion and repurchased $1 billion of shares while increasing the dividend by 10%.
- Updated Guidance: Revenue in the range of $43.3 billion to $44.2 billion and adjusted EPS in the range of $21.76 to $22.84, incorporating the expected impact of tariffs and changes driven by the current policy focus of the US administration.
- Mitigation Actions: Actively managing the business to mitigate the impact of macro changes and capitalize on new opportunities, including increasing investment in US manufacturing and R&D.
- Guiding Principles: Ensuring customer success, inspiring colleagues, and delivering differentiated short-term performance while enhancing long-term competitive position.
Focus of the analyst Q&A
- Guidance Methodology and Macro Uncertainty:
- What are the upside and downside scenarios for revenue and EPS guidance, considering the changing policy landscape?
- What levers are available to offset further deterioration or capitalize on improvements?
- Long-Term Market Growth:
- What is the outlook for the underlying tools market growth rate beyond 2025, considering potential impacts from NIH funding and US government policy?
- Will there be enough offsets and ability to find new funding sources to maintain the long-term growth outlook?
- Biopharma End Market and Order Behavior:
- Are there any changes in order behavior or patterns among large biopharma customers, such as pull-forward of inventories due to tariffs?
- How is the company working with customers to avoid significant supply chain disruptions?
- Manufacturing Flexibility and Mitigation:
- How flexible are different types of product manufacturing (e.g., instruments vs. consumables) in terms of mitigating tariff impacts?
- What is the order of priorities for flexing manufacturing, and what is the expected timing?
- Pharma Services Business:
- What inning is the pharma services business in post-COVID recovery?
- Is demand more API-related or fill-finish?
- Policy Changes and Guidance Reduction:
- What percentage of the $500 million guidance reduction related to policy changes is attributable to academic and government weakness versus clinical trial weakness?
- What are the updated expectations for the academic and government market for the full year?
- Pricing Assumptions:
- What are the broad pricing assumptions and expectations for the year, considering tariffs?
- How much mitigation is expected through pricing, and how conservative are these assumptions?
- Reshoring and Infrastructure Build-Out:
- What is the company seeing in terms of movement towards reshoring in the US and elsewhere?
- What form does this take for Thermo Fisher, and where will the company benefit most?
Summary
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Financial Performance
Thermo Fisher Scientific reported a strong Q1 2025, with revenue of $10.36 billion, adjusted operating income of $2.27 billion, and adjusted EPS of $5.15, a 1% increase year-over-year. Organic revenue grew by 1%. The company beat its prior guidance for the quarter, with organic revenue approximately $100 million ahead and adjusted EPS $0.04 ahead. However, adjusted operating margin was 21.9%, a decrease of 10 basis points compared to Q1 of the previous year.
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Revenue Drivers
Revenue growth was driven by the bioproduction and pharma services businesses, as well as the research and safety market channel. The electron microscopy business also showed strong growth. Pharma and Biotech end market grew low single-digits, while Academic and Government declined low single digits due to macro conditions in the U.S. and China. Diagnostics and Healthcare grew low single digits, reflecting strong performance in the healthcare market channel and in transplant diagnostics and immunodiagnostics businesses. The company faced a 3% headwind from fewer selling days and the runoff of pandemic-related revenue.
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Profit Margins and Cost Management
The adjusted operating margin was 21.9%, down 10 basis points year-over-year. Gross margin was 41.7%. Strong productivity helped offset unfavorable mix and foreign exchange headwinds. The company is actively managing its cost base and supply chain to mitigate the impact of tariffs. Strategic investments in R&D and US manufacturing are ongoing.
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Guidance and Outlook
The company updated its 2025 guidance to reflect the impact of tariffs and changes driven by US policy focus. The updated revenue guidance range is $43.3 billion to $44.2 billion, with organic growth expected to be 2% at the midpoint. Adjusted EPS guidance is now $21.76 to $22.84. The guidance incorporates a $0.70 EPS headwind from US-China tariffs and a $0.30 EPS headwind from changes in US policy focus. The company expects to mitigate the tariff impact fully in the following year.
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Strategic Initiatives
Thermo Fisher is focused on high-impact innovation, strengthening its trusted partner status with customers, and leveraging its commercial engine. The company announced an agreement to acquire SOVENTUM's purification and filtration business for $4.1 billion. They repurchased $1 billion of shares and increased the dividend by 10% during the quarter. The company is also investing approximately $2 billion in US manufacturing and R&D.
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Management Commentary
Management expressed confidence in the company's growth strategy, PPI business system, and capital deployment approach. They emphasized agility in navigating the uncertain macro environment and mitigating the impact of tariffs. They highlighted the company's strong customer relationships and commitment to enabling customer success. Management believes the company is well-positioned to minimize the impact of macro changes and maximize new opportunities.
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Industry and Market Conditions
Management acknowledged the uncertain macro environment, including the impact of tariffs and changes in US policy focus. They noted the potential for reduced trade between the US and China due to tariffs. They also highlighted the potential impact of changes in government funding on US academic and government customers. Despite these challenges, they remain optimistic about the long-term health of the life science tools industry.
Comparative analysis
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Benchmarks (as of 2025-06-09)
Health Care Select Sector SPDR Fund (XLV)
- Performance Comparison:
- Thermo Fisher Scientific, Inc. (TMO) has consistently underperformed the Health Care Select Sector SPDR Fund (XLV) across all time periods analyzed. For instance, the Year-To-Date performance shows TMO at -21.76% compared to XLV at -2.14%, a difference of -19.62%. Over a longer three-year period, TMO returned -21.85% compared to XLV's 12.21%, a significant underperformance of -34.06%. The only exception is the 1 Week performance, where TMO overperformed XLV by 1.31%.
- Risk and Return Analysis:
- The annualized returns for TMO are consistently lower than those of XLV. Over three years, TMO's annualized return was -7.89%, while XLV's was 3.91%. This indicates that TMO has provided lower returns compared to XLV.
- TMO's annualized volatility has generally been higher than XLV's. For example, in Q2 2025, TMO's volatility ranged from 52.37% to 35.38%, while XLV's ranged from 32.24% to 22.4%. This suggests that TMO is a more volatile investment than XLV.
- The maximum drawdown for TMO was -40.5% on 05/23/2025, significantly larger than XLV's maximum drawdown of -17.11% on 05/14/2025. This indicates that TMO carries a higher risk profile, with the potential for more significant losses from peak values.
- Risk-Adjusted Performance:
- The Sharpe Ratios for TMO are generally lower than those for XLV, indicating that XLV offers better risk-adjusted returns. In Q2 2025, TMO's Sharpe Ratio was -1.09, while XLV's was -0.24, further emphasizing TMO's poorer risk-adjusted performance.
- TMO's beta has fluctuated around 1, while XLV's beta has remained consistently below 1. This suggests that TMO's price is as or more volatile than the market, while XLV's price is less volatile than the market. As of Q2 2025, TMO's beta is 0.74 and XLV's beta is 0.47.
- Overall Assessment:
- Based on the data, Thermo Fisher Scientific, Inc. (TMO) has underperformed Health Care Select Sector SPDR Fund (XLV) across most metrics. TMO exhibits higher volatility, larger drawdowns, and lower risk-adjusted returns compared to XLV. While TMO's beta has decreased recently, it still indicates a higher sensitivity to market movements than XLV. The recent trends show a period of poor risk-adjusted performance for both, but TMO's performance is substantially worse.
Peers Price History(as of 2025-06-09)
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Performance Comparison:
- Thermo Fisher Scientific (TMO) has generally underperformed both IDEXX Laboratories (IDXX) and Agilent Technologies (A) across various time periods, including Year-To-Date (YTD), 1 Month, 3 Months, 6 Months, 1 Year, 2 Years, and 3 Years. For example, the YTD performance shows TMO at -21.76% compared to IDXX at 26.84% and A at -12.32%. The 3-year performance shows TMO at -21.85% compared to IDXX at 49.93% and A at -1.1%.
- TMO's performance is less consistent compared to its peers. While it has mostly underperformed, there are instances, such as the 1 Week performance, where it has overperformed IDXX.
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Risk and Return Analysis:
- The annualized returns for TMO are lower than those of IDXX and A over 1, 2, and 3-year periods. For instance, the 3-year annualized return for TMO is -7.89%, compared to 14.45% for IDXX and -0.37% for A.
- TMO's annualized volatility has generally been lower than that of IDXX but comparable to A. In Q2 2022, TMO's volatility ranged from 36.41% to 37.33%, while IDXX's ranged from 52.4% to 52.91% and A's ranged from 44.09% to 45.11%.
- The maximum drawdown for TMO was -40.5% on 2025-05-23, which is less than IDXX's -54% on 2022-10-14 but close to A's -42.73% on 2023-10-30. This indicates that TMO's risk profile is moderate, with potential for significant declines from previous peaks.
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Risk-Adjusted Performance:
- The Sharpe Ratio for TMO is generally lower than that of IDXX, indicating that TMO offers a less favorable risk-adjusted return. The Sharpe ratios for TMO and A fluctuate more than those of IDXX, suggesting less consistent risk-adjusted returns.
- TMO's beta values are generally around or below 1, indicating that it is less sensitive to market movements compared to IDXX, which has beta values consistently above 1. Agilent Technologies (A) has beta values generally around 1.
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Overall Assessment:
- Thermo Fisher Scientific (TMO) has underperformed its peer companies, IDEXX Laboratories (IDXX) and Agilent Technologies (A), across most performance metrics. While TMO exhibits moderate volatility and a lower beta, its lower annualized returns and Sharpe Ratio suggest that it offers a less attractive risk-adjusted return compared to its peers.
- A significant trend is the fluctuating volatility and Sharpe ratios for TMO, indicating inconsistency in its risk-adjusted returns. IDEXX, on the other hand, generally maintains higher Sharpe ratios and beta values, suggesting a higher risk, higher reward profile. Agilent Technologies (A) presents a risk profile similar to the market.
Peers Fundamentals(as of 2025-03-31)
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Market Position and Size:
- Thermo Fisher Scientific (TMO) stands out with a significantly larger market capitalization of $154,217.62 million compared to its peers, IDEXX Laboratories (IDXX) at $41,706.8 million and Agilent Technologies (A) at $33,161.75 million.
- This substantial market cap is supported by TMO's higher revenue of $42,898 million and net income of $6,515 million, dwarfing the financial metrics of IDXX and A.
- TMO's dominant market position is evident through its superior revenue and net income, reflecting its broader operational scope and market reach within the peer group.
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Profitability and Efficiency:
- TMO's profitability margins, including a Gross Profit Margin of 40.56%, EBITDA Margin of 25.08%, and Net Profit Margin of 15.19%, are lower than those of its peers, IDXX and A.
- However, TMO's profitability metrics are significantly above the industry average, indicating strong profitability relative to the broader industry.
- TMO's efficiency in generating returns, as measured by Return on Average Assets, Return on Average Total Equity, Return on Average Total Capital, and Return on Average Invested Capital, is also lower than its peers but remains positive and above the industry average.
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Financial Health and Stability:
- TMO's liquidity ratios, such as the Current Ratio of 1.77 and Quick Ratio of 1.38, are below the industry average, suggesting a need for improved short-term financial flexibility.
- TMO's Total Debt to Total Equity Ratio of 69.22% is higher than A but lower than IDXX and the industry average, indicating a balanced capital structure.
- TMO's Debt / EBITDA ratio of 3.18 is higher than its peers but lower than the industry average, suggesting manageable debt levels relative to its earnings.
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Valuation and Market Perception:
- TMO's valuation metrics, including Enterprise Value To Sales, Enterprise Value To EBITDA, Price To Earnings, Price to Book Ratio, and Price To Sales Ratio, are generally lower than its peers and the industry average.
- This suggests that TMO may be undervalued relative to its earnings and sales, potentially offering an attractive investment opportunity.
- The market's perception of TMO appears to be more conservative compared to its peers, as reflected in its lower valuation multiples.
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Cash Flow and Capital Management:
- TMO demonstrates strong cash flow generation capabilities, with a Net Operating Cash Flow of $8,139 million and Free Cash Flow of $6,724 million, significantly outperforming its peers.
- TMO's Total Capital Expenditure of $1,415 million is also higher than its peers, indicating substantial investments in its operations and future growth.
- TMO's effective capital management is evident through its ability to generate significant cash flow while maintaining a balanced capital structure.
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Growth and Future Prospect:
- TMO's revenue growth has been inconsistent, with a recent deceleration in year-over-year growth.
- TMO's EBITDA, net income, and free cash flow growth have also been volatile, with recent declines in year-over-year growth.
- TMO's 5-year CAGR is higher than its 3-year CAGR for most metrics, indicating stronger historical growth, but the recent deceleration raises concerns about its future prospects.
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Potential for Investment:
- TMO presents a mixed investment profile, with its dominant market position, strong cash flow, and solid earnings per share making it an attractive investment.
- However, its lower profitability margins, lower efficiency in generating returns, and recent growth deceleration raise concerns about its future prospects.
- Investors should carefully consider TMO's valuation metrics, which suggest it may be undervalued relative to its earnings, but also weigh the risks associated with its recent growth deceleration.
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Key Risks and Considerations:
- TMO's lower profitability margins compared to its peers could limit its ability to generate higher returns for investors.
- TMO's recent growth deceleration raises concerns about its future prospects and ability to maintain its competitive position.
- Investors should closely monitor TMO's ability to improve its profitability margins, sustain its cash flow generation, and revitalize its growth trajectory.
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Overall Assessment:
- TMO's overall financial position is strong, characterized by its dominant market position, strong cash flow generation, and solid earnings per share.
- However, its lower profitability margins, lower efficiency in generating returns, and recent growth deceleration warrant careful consideration.
- TMO's future success will depend on its ability to address these challenges and capitalize on its strengths to drive sustainable growth and enhance shareholder value.
Comparison metrics
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