We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Thermo Fisher Stock Hurt by Macroeconomic Woes, Tough Competition
Read MoreHide Full Article
Key Takeaways
TMO faces margin pressure from weak macro trends, supply disruptions and rising operating expenses.
Foreign exchange volatility and global expansion heighten risk to Thermo Fisher's international revenues.
TMO's $4.1B Solventum deal aims to boost biologics growth and deliver $125M in synergy over five years.
Thermo Fisher (TMO - Free Report) suffers from macroeconomic issues. Also, competitive headwinds and currency fluctuations continue to dampen top-line growth. The stock carries a Zacks Rank #4 (Sell) currently.
Concerning Factors for TMO
Difficult macroeconomic conditions leading to disruptions in economic activity, global supply chains and labor markets are creating a challenging business environment for Thermo Fisher. International conflicts, including the Russia-Ukraine war and tension between China and Taiwan, have increased cybersecurity risks on a global basis. Further, volatile financial market dynamics and significant volatility in the price and availability of goods and services are putting pressure on the company’s profitability.
With sustained macroeconomic pressure, Thermo Fisher may struggle to keep its operating expenses in check. Thermo Fisher's gross margin and operating margin contracted 5 bps and 2 bps, respectively, in the first quarter of 2025. Our model projects a 22.4% increase in the company’s adjusted operating expenses for 2025.
International markets contribute a substantial portion of Thermo Fisher’s revenues, and the company intends to continue expanding its presence. International revenues are subject to the risk of fluctuations in exchange rates that could affect a company’s reported revenues and profitability when translated into U.S. dollars for financial reporting purposes. As Thermo Fisher’s international sales grow, exposure to fluctuations in currency exchange rates could have a bigger effect on its financial results.
On account of its diversified portfolio, Thermo Fisher faces different types of competitors, including a broad range of manufacturers and third-party distributors. The competitive landscape is quite tough with changing technology and customer demands that require constant research and development.
Thermo Fisher’s business strategy primarily includes expansion through the strategic acquisition of technologies and businesses that augment its existing products and services. A recent strategic acquisition that is likely to drive future growth includes the $4.1 billion acquisition of Solventum’s Purification & Filtration business in the first quarter of 2025. The acquisition is likely to enhance Thermo Fisher’s capabilities in the development and manufacturing of biologics, spanning upstream and downstream workflows. Through the acquisition, the company expects to deliver $125 million in adjusted operating income benefits in the next five years, driven by revenue synergies and cost efficiencies.
Thermo Fisher continues to expand its business on the back of strategic alliances. During the first quarter, within the electron microscopy space, the company collaborated with the Chan Zuckerberg Institute for Advanced Biological Imaging to advance the understanding of human cells by leveraging cutting-edge cryo-electron tomography technologies. In addition, Thermo Fisher entered into a 10-year virtual power purchasing agreement with international renewable energy developer X-ELIO to accelerate its 100% renewable electricity goal for its European operations.
In the past year, shares of TMO have declined 27.3% compared with the industry’s 12.8% decline. With its consistent focus on expanding through strategic acquisitions and partnerships, and favorable end market performance, we expect the stock to gain momentum in the coming days.
Key Picks
Some better-ranked stocks in the broader medical space are Phibro Animal Health (PAHC - Free Report) , Prestige Consumer Healthcare (PBH - Free Report) and Inspire Medical Systems (INSP - Free Report) .
Phibro Animal Health has an estimated long-term earnings growth rate of 26.2% compared with the industry’s 15.9%. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 30.6%. Its shares have rallied 26.3% compared with the industry’s 10% growth in the past year.
Prestige Consumer Healthcare, currently carrying a Zacks Rank #2 (Buy), has an earnings yield of 5.4% compared with the industry’s 0.6%. Shares of the company have rallied 30.3% compared with the industry’s 10% growth. PBH’s earnings surpassed estimates in three of the trailing four quarters and matched on one occasion, the average surprise being 2.8%.
Inspire Medical Systems, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 28.9% compared with the industry’s 25.2%. Shares of the company have lost 9.5% against the industry’s 19.6% growth. INSP’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 356.9%.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Shutterstock
Thermo Fisher Stock Hurt by Macroeconomic Woes, Tough Competition
Key Takeaways
Thermo Fisher (TMO - Free Report) suffers from macroeconomic issues. Also, competitive headwinds and currency fluctuations continue to dampen top-line growth. The stock carries a Zacks Rank #4 (Sell) currently.
Concerning Factors for TMO
Difficult macroeconomic conditions leading to disruptions in economic activity, global supply chains and labor markets are creating a challenging business environment for Thermo Fisher. International conflicts, including the Russia-Ukraine war and tension between China and Taiwan, have increased cybersecurity risks on a global basis. Further, volatile financial market dynamics and significant volatility in the price and availability of goods and services are putting pressure on the company’s profitability.
With sustained macroeconomic pressure, Thermo Fisher may struggle to keep its operating expenses in check. Thermo Fisher's gross margin and operating margin contracted 5 bps and 2 bps, respectively, in the first quarter of 2025. Our model projects a 22.4% increase in the company’s adjusted operating expenses for 2025.
International markets contribute a substantial portion of Thermo Fisher’s revenues, and the company intends to continue expanding its presence. International revenues are subject to the risk of fluctuations in exchange rates that could affect a company’s reported revenues and profitability when translated into U.S. dollars for financial reporting purposes. As Thermo Fisher’s international sales grow, exposure to fluctuations in currency exchange rates could have a bigger effect on its financial results.
On account of its diversified portfolio, Thermo Fisher faces different types of competitors, including a broad range of manufacturers and third-party distributors. The competitive landscape is quite tough with changing technology and customer demands that require constant research and development.
Thermo Fisher Scientific Inc. Price
Thermo Fisher Scientific Inc. price | Thermo Fisher Scientific Inc. Quote
Factors to Drive TMO's Shares
Thermo Fisher’s business strategy primarily includes expansion through the strategic acquisition of technologies and businesses that augment its existing products and services. A recent strategic acquisition that is likely to drive future growth includes the $4.1 billion acquisition of Solventum’s Purification & Filtration business in the first quarter of 2025. The acquisition is likely to enhance Thermo Fisher’s capabilities in the development and manufacturing of biologics, spanning upstream and downstream workflows. Through the acquisition, the company expects to deliver $125 million in adjusted operating income benefits in the next five years, driven by revenue synergies and cost efficiencies.
Thermo Fisher continues to expand its business on the back of strategic alliances. During the first quarter, within the electron microscopy space, the company collaborated with the Chan Zuckerberg Institute for Advanced Biological Imaging to advance the understanding of human cells by leveraging cutting-edge cryo-electron tomography technologies. In addition, Thermo Fisher entered into a 10-year virtual power purchasing agreement with international renewable energy developer X-ELIO to accelerate its 100% renewable electricity goal for its European operations.
In the past year, shares of TMO have declined 27.3% compared with the industry’s 12.8% decline. With its consistent focus on expanding through strategic acquisitions and partnerships, and favorable end market performance, we expect the stock to gain momentum in the coming days.
Key Picks
Some better-ranked stocks in the broader medical space are Phibro Animal Health (PAHC - Free Report) , Prestige Consumer Healthcare (PBH - Free Report) and Inspire Medical Systems (INSP - Free Report) .
Phibro Animal Health has an estimated long-term earnings growth rate of 26.2% compared with the industry’s 15.9%. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 30.6%. Its shares have rallied 26.3% compared with the industry’s 10% growth in the past year.
PAHC sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Prestige Consumer Healthcare, currently carrying a Zacks Rank #2 (Buy), has an earnings yield of 5.4% compared with the industry’s 0.6%. Shares of the company have rallied 30.3% compared with the industry’s 10% growth. PBH’s earnings surpassed estimates in three of the trailing four quarters and matched on one occasion, the average surprise being 2.8%.
Inspire Medical Systems, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 28.9% compared with the industry’s 25.2%. Shares of the company have lost 9.5% against the industry’s 19.6% growth. INSP’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 356.9%.