THERMO FISHER SCIENTIFIC INC. (TMO): what the price requires
At today's price, THERMO FISHER SCIENTIFIC INC. (TMO) is priced for +21.4% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/TMO
Headline
| Field | Value |
|---|---|
| Ticker | TMO |
| Company | THERMO FISHER SCIENTIFIC INC. |
| Sector / Industry | Technology / Scientific Instruments |
| Current price | $528.83/sh |
| Composition | Consumables 42% / Instruments 16% / Services 42% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 10.2% |
| Operating margin today | 17.0% |
| Margin compression implied | -6.8pp |
| Implied growth | 21.4% |
| Multiple paid | 33x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 7.9% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~8.9pp.
Reconcile: at the x-ray's 9.3% required return this reads ~6.7 years; the models below use their own rates.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +0.58σ |
| cohort percentile (of 177 peers) | 59 |
| sustained it ~5 years at this level | 35% |
| implied end-window share | 0% |
Valuation X-Ray
Every valuation family lands below the price. The price therefore requires assumptions beyond what those standard frames encode.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 2.25x | 5 | expensive |
| Earnings | 5.23x | 5 | expensive |
| Relative | 2.42x | 5 | expensive |
| Growth | 1.28x | 3 | expensive |
Families that call it expensive: Asset, Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.6%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $413.29 | 1.28x | yes | FCF base $7.1B, growth 5% (input: historical growth), terminal g 4.0%, WACC 7.6%, 5yr projection |
| DCF Exit Multiple | Growth | $489.97 | 1.08x | yes | Exit EV/EBITDA: 24.8x / 26.8x / 28.8x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $345.67 | 1.53x | yes | P/E 21.24x (blended: static sector reference 18x + trailing (TTM) 29x), scenarios: 17.9x / 21.2x / 24.6x (bear / base = reference held flat / bull), EV/EBITDA 16.43x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $198.48 | 2.66x | yes | BV/sh $139.23, ROE (TTM) 13.2%, ke 9.3% |
| Two-Stage Excess Return | Asset | $234.91 | 2.25x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $394.00 | 1.34x | yes | Rev $45.2B, growth 5% (input: historical growth; tapered), Terminal P/S: 3.7x / 4.4x / 5.1x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $218.28 | 2.42x | yes | EPS $18.19, growth 7% (input: historical EPS growth), PEG=4.31 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $101.09 | 5.23x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $7.88B × (1−21%) / WACC 7.6% → EPV (no growth) |
| Residual Income | Asset | $242.70 | 2.18x | yes | BV $139.23 + 5yr PV of (ROE (TTM) 13.2% − Kₑ 9.3%) × BV; BV grows 8.6%/yr |
| Graham Number | Asset | $238.71 | 2.22x | yes | √(22.5 × EPS $18.19 × BVPS $139.23) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $173.98 | 3.04x | yes | EBITDA $8.97B × sector EV/EBITDA 12.0x |
| FCF Yield | Earnings | $80.88 | 6.54x | yes | FCF $6748.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $71.66 | 7.38x | yes | SBC-adj FCF $6.43B (FCF $6.75B − SBC $0.32B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $333.21 | 1.59x | yes | EPS $18.19 × (8.5 + 2×6.7%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $28.41 | 18.61x | yes | BV $139.23 × (ROIC 1.6% / WACC 7.6%) |
| P/Sales Sector | Relative | $302.93 | 1.75x | yes | Revenue $45.20B × sector P/S 2.5x |
| PEG Fair Value | Relative | $182.22 | 2.90x | yes | EPS $18.19 × (PEG 1.5 × growth 6.7% (input: historical EPS growth)) → PE 10.0x |
| Earnings Yield | Earnings | $196.65 | 2.69x | yes | EPS $18.19 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $42.8b |
| Net debt / NOPAT (after-tax) | 7.36x |
| Net debt / operating income (pre-tax) | 5.82x |
| Interest coverage | 5.2x |
| Share count CAGR (buyback) | -1.4% |
| Burning cash | no |
Bullet Takeaways
- Thermo Fisher is the picks-and-shovels vendor to the entire life-sciences economy, $45.2B of trailing revenue across consumables, instruments, and services, with $4.65B returned to shareholders over the past year and a fresh $9 billion acquisition of Clario extending its clinical-trial data business.
- The risk is the price, not the business: today's level embeds operating-profit growth of roughly 21.6% a year for five years, a pace only about 35% of comparable fast-growers have sustained that long, while management guides 2026 organic revenue growth of just 3% to 4%.
- Watch the July 29 second-quarter report for whether academic and government demand stabilizes and tariff drag eases; the FY2025 10-K notes that "Demand for some of our products depends on capital spending policies of our customers and on government funding".
Bull Case
The market is pricing Thermo Fisher like a compounding machine rather than an instruments maker, and the fundamentals give that framing more support than the multiple alone suggests. What the price is actually leaning on is duration, not heroics: the arithmetic behind today's level requires operating margins well below what the company already earns, at about 17.5% today. The bet is that a business this entrenched keeps growing for a very long time. Entrenchment is the right word. Thermo Fisher sells the consumables, instruments, and services that pharmaceutical, biotech, academic, and diagnostic customers run their daily work on, and its own filing describes the growth engine as deliberately layered: "strengthening our presence in selected geographic markets; allocating research and development funding to products with higher growth prospects; developing new applications for our technologies; expanding our service offerings" (FY2025 10-K, accession 0000097745-26-000018).
The recent prints back the durability claim. In FY2025 the pharma services business and the research and safety market channel grew "$457 million and $422 million, respectively" on a reported basis, per the 10-K, even as COVID-era revenue kept moderating out of the base. First-quarter 2026 revenue grew 6% to $11.01 billion with adjusted EPS up 6% to $5.44, and management raised full-year guidance to $47.3 to $48.1 billion of revenue and adjusted EPS of $24.64 to $25.12, an 8% to 10% increase. The Clario acquisition, closed in late March at a $9 billion initial price, adds an endpoint-data business expected to contribute roughly $900 million of 2026 revenue and about $0.32 of adjusted EPS. That is the familiar Thermo Fisher pattern: buy a capability the customer base already needs, then push it through the largest commercial channel in the industry.
The financial engine underneath is steady rather than spectacular, which is the point. Free cash flow of $6.75B converts nearly all of net income, all four trailing quarters generated positive free cash flow, and the balance sheet carries moderate, well-covered leverage with a fortress-grade solvency profile. Capital return runs through both channels: $4.00B of buybacks and $649M of dividends over the trailing year, with the dividend growing and the payout ratio at just 10.2%, leaving enormous headroom. A buyer at today's price is not paying for a turnaround or a product cycle; they are paying for the most diversified toll collector in life sciences to keep doing what it has done through every research-funding cycle.
Bear Case
Follow the cash and the bear case assembles itself. Over the trailing year management spent $4.00B on buybacks, 58.4% of net income, and the share count still is not falling; the repurchases are largely absorbing stock issuance rather than shrinking the ownership base. Meanwhile the company layered a $9 billion initial purchase price for Clario, with future performance-based payments on top, onto a balance sheet already carrying debt at 0.89x equity and goodwill the 10-K puts at "$49.36 billion at December 31, 2025" (accession 0000097745-26-000018). A quarter of a century of serial acquisition built this company, but it means reported growth is perpetually part-purchased, and the filing itself concedes the goodwill math rests on "assumptions related to revenue and operating income margin growth rates, discount rates and other factors". Return on equity of 13.2% is what all that capital currently earns, which is respectable and unremarkable, and notably close to the cost of that equity.
The price, though, assumes something better than unremarkable. The market is paying about 33 times company-wide operating income, and at 28.7x trailing GAAP earnings against a sector median of 18x, the stock carries a premium the operating trajectory has to keep validating. The near-term reality is mid-single-digit: 2026 guidance assumes just 3% to 4% organic growth, first-quarter adjusted operating margin actually slipped 10 basis points to 21.8% with an 80-basis-point drag from tariffs and related currency effects, and academic and government revenue declined low single digits on persistent U.S. and China headwinds. If the growth the price requires does not materialize, the premium multiple has no floor of its own; the earnings-power methods put today's price at several times what current profitability alone would support, which is another way of saying the multiple is the risk.
The structural exposures are documented where bears should look first. The 10-K flags that "Demand for some of our products depends on capital spending policies of our customers and on government funding", and that failure to navigate government-contract rules "could harm our business by leading to a reduction in revenues associated with these customers". Pharma and biotech budgets are themselves hostage to drug-pricing policy and funding cycles, and competitors are not idle: Agilent's own 10-K names Thermo Fisher directly among the rivals it fights across life sciences, diagnostics, and applied markets (accession 0001090872-25-000087), and Danaher's bioprocessing franchise contests the same customers. None of this breaks the company. All of it bears on whether a mature, acquisition-assembled business deserves a price that no standard valuation frame currently reaches.
Valuation
At $526.95 (July 11, 2026), the market is paying about 33 times company-wide operating income, which works out to an embedded assumption of roughly 21.6% annual operating-profit growth sustained for five years. The rate itself is within what the company has recently delivered; the stretch is the duration. Of comparable fast-growers historically, only about 35% sustained that pace for even five years. One softer note in the price's favor: the margin the price requires over the long run sits below the roughly 17.5% operating margin the business earns today, so the bet is concentrated entirely in growth and its persistence, not in margin expansion.
No family of valuation method reaches the price. The forward-growth methods come closest, with the price about 1.4x above their central estimate; peer multiples read it at roughly 2.4x, asset value at 2.7x, and the earnings-power methods, which capitalize a five-year average of operating income with no growth credit, sit furthest away at 6.9x. The pattern is coherent: every frame that credits forward compounding gets near the price, and every frame anchored to demonstrated profitability does not. That spread is the premium, and it is a premium for durability. The demonstrated base it rests on is real: $45.20B of trailing revenue, $6.85B of net income, and $6.75B of free cash flow converting 98.5% of earnings, with FY2025 segment growth documented in the filing, the pharma services business and research and safety channel adding "$457 million and $422 million, respectively" on a reported basis (FY2025 10-K, accession 0000097745-26-000018). On trailing multiples the stock stands at 28.7x GAAP earnings versus an 18x sector median and 26.7x EV/EBITDA versus 12x, both roughly the sector's premium name pricing.
The balance sheet does not add risk to the bet. Leverage is moderate and well covered, the current ratio is 1.53, and the company generated positive free cash flow in all four trailing quarters while returning $4.65B through dividends and buybacks. The dividend, at an annualized $1.88 per share declared rate and a 10.2% payout, is an afterthought rather than a commitment. What the buyer at today's price is underwriting is singular and simple to state: that this franchise compounds operating profit at a pace only about a third of comparable companies have sustained, for at least five more years.
Catalysts
The next information event is the second-quarter report on July 29, 2026, before the open. Management guided second-quarter organic revenue growth of approximately 3% with adjusted EPS $0.25 to $0.30 higher than the first quarter, and Street consensus sits near $5.72 of Q2 2026 adjusted EPS, up roughly 7% year over year. The print will show whether the two live headwinds from Q1 are fading: tariffs and related currency effects cost 80 basis points of adjusted operating margin last quarter, and academic and government revenue declined low single digits on U.S. and China pressure, though management pointed to the late-January U.S. budget passage as a stabilizer.
Clario is the swing factor in the model for the rest of the year. The endpoint-data business closed in late March at a $9 billion initial purchase price with future performance-based payments, contributed $30 million of revenue and $0.01 of adjusted EPS in its first partial quarter, and is expected to add roughly $900 million to 2026 revenue and about $0.32 of adjusted EPS. Its integration pace, and any disclosure on the performance-payment triggers, will shape how the raised full-year guidance of $47.3 to $48.1 billion in revenue and $24.64 to $25.12 in adjusted EPS lands within its range.
Beyond the quarter, the watch items are the ones that move a duration bet: whether pharma and biotech customers keep converting clinical pipelines into services demand, whether China stabilizes, and whether the company resumes shrinking its share count rather than merely offsetting issuance. Each successive quarter of mid-single-digit organic growth is consistent with the guidance and, at the same time, a reminder of how much heavier the lifting embedded in the price is.
Peer Cohorts (Per Segment, With Filing Citations)
Life Sciences Solutions (reported)
- ILMN (Illumina, Inc.)
- (no filing in the citation store)
- QGEN (QIAGEN N.V.)
- (no filing in the citation store)
- A (AGILENT TECHNOLOGIES, INC.)
- (no filing in the citation store)
- BIO (Bio-Rad Laboratories, Inc.)
- (no filing in the citation store)
- DHR (Danaher Corporation)
- (no filing in the citation store)
- RVTY (REVVITY, INC)
- (no filing in the citation store)
- TXG (10x Genomics, Inc.)
- (no filing in the citation store)
Analytical Instruments (reported)
- A (AGILENT TECHNOLOGIES, INC.)
- (no filing in the citation store)
- WAT (Waters Corporation)
- (no filing in the citation store)
- MTD (Mettler-Toledo International Inc.)
- (no filing in the citation store)
- BRKR (BRUKER CORPORATION)
- (no filing in the citation store)
- RVTY (REVVITY, INC)
- (no filing in the citation store)
- DHR (Danaher Corporation)
- (no filing in the citation store)
Specialty Diagnostics (reported)
- QGEN (QIAGEN N.V.)
- (no filing in the citation store)
- DGX (QUEST DIAGNOSTICS INC)
- (no filing in the citation store)
- LH (LABCORP HOLDINGS INC.)
- (no filing in the citation store)
- BIO (Bio-Rad Laboratories, Inc.)
- (no filing in the citation store)
- RVTY (REVVITY, INC)
- (no filing in the citation store)
- IDXX (IDEXX LABORATORIES INC /DE)
- (no filing in the citation store)
- NEOG (Neogen Corporation)
- (no filing in the citation store)
Laboratory Products and Biopharma Services (reported)
- IQV (IQVIA HOLDINGS INC.)
- (no filing in the citation store)
- ICLR (ICON plc)
- (no filing in the citation store)
- CRL (CHARLES RIVER LABORATORIES INTERNATIONAL, INC.)
- (no filing in the citation store)
- MEDP (Medpace Holdings, Inc.)
- (no filing in the citation store)
- AVTR (Avantor, Inc.)
- (no filing in the citation store)
- WAT (Waters Corporation)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
company press releases, Q1 2026 · Q1 2026 earnings release, April 23, 2026 · company press release, March 2026 · Q1 2026 earnings release and call, April 23, 2026 · TIKR and TipRanks earnings previews, 2026 · Q1 2026 earnings call, April 23, 2026 · company press releases, March and April 2026