Thermo Fisher (NYSE:TMO): A classic blue-chip health stock for the rest of the 2020s

Capped at over US$180bn, Thermo Fisher (NYSE:TMO) is a classic blue-chip healthcare stock. It has not escaped an impact from the Biotech Bear market, but appears to be bouncing back. Investors have been concerned about the impact of Ozempic, but the company has been launching a series of new products that position itself well for the years ahead.

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Introduction to Thermo Fisher (NYSE:TMO)

This company is a world leading health company. You name something to do with healthcare and it is more likelier than not that Thermo Fisher does that. It makes, supplies and provides lab equipment, pharmaceutical drugs, consumables for medical devices and medical software just to name a few. This was the company that introduced single-use bio-reactors and the first automated DNA analyser.

Its mission is to ‘Enable our customers to make the world healthier, cleaner and safer’. The company began in 1956 as Thermo Electron and had a modest few decades, generating US$2bn in revenue in 2004. But it went to the next level after merging with Fisher Scientific in 2006 and now makes over US$40bn a year. The merged company has continued to grow through the popularity of its existing devices and several acquisitions made in the last decade.

Thermo Fisher is headquartered in the outskirts of Boston, Massachusetts – specifically in Waltham, a classic industrial city that was the original home of the Boston Manufacturing company. You’ll find its Australian headquarters in the Sydney suburb of Macquarie Park. We know the life sciences industry is resilient and has long-term growth prospects. It has 125,000 employees, of which 7,300 are dedicated to R&D – a unit that invests $1.5bn annually.

Why you’d consider investing in it?

As is the case with many other Wall Street stocks it is because of its track record of growth and its future prospects. In the past decade, the company has delivered 14% CAGR revenue, 17% CAGR EPS and 15% for FCF.

Thermo Fisher’s potential market size has tripled in 10 years from $80bn to $240bn, all because of all the acquisitions it has made. Among them, genetic tester Life Technologies, contract manufacturer Pantheon, and clinical research services provider PPD. These 3 cost just over $37bn between them.

In the long term, Thermo Fisher is targeting 7-9% long-term revenue growth and 60-75% of capital anticipated to be deployed to M&A. Thermo Fisher has a solid ESG element, not just because it is a healthcare company but because of its emission reduction efforts. It has cut Scope 1 & 2 emissions by 25% and aims for Net Zero by 2050.

Short-term difficulties but the long-term story is still in tact

Thermo Fisher is in far from a perfect state right now. After a unprecedented bull run in the life sciences industry, it is seeing more cautious spending by its clients – particularly in China. In 2023, the company’s revenues retreated by 4% from $44.9bn to $42.9bn, driven by a 26% decline in its Life Sciences Solutions Division; and revenues were flat in 2024.

The company suffered from bearish investor sentiment towards biotech companies due to equity market conditions generally as well as concern over the impact of weight-loss drugs Wegovy and Ozempic. Reduce obesity and you may well reduce the incidence of health problems that make many health companies money. Trump’s tariffs added another spanner into the works.

But these drugs may actually be a good thing for Thermo Fisher. Last year, it was hired as a contract manufacturer by Novo Nordisk for Wegovy. Demand for the drug is causing the need for more manufacturers to be signed up, to keep up with demand.

Moreover, 2025 has been a good year with revenues growing 5% in the most recent quarter with 3% in the quarter prior. The past 18 months has seen a series of product launches including Thermo Scientific Iliad transmission electron microscope, the Stellar mass spectrometer, the Dionex Inuvion Ion Chromatography system, and a new MagMAX DNA/RNA kit. Arguably, the most crucial was the acquisition of Olink Proteomics for US$3.1bn. This strengthens the company’s life-sciences segment by adding high-throughput protein biomarker discovery via Olink’s Proximity Extension Assay (PEA) technology.

Most recently, in Q3 2025, Thermo got FDA approval for the Oncomine Dx Express test on the Genexus Dx sequencer, as a companion diagnostic. It also acquired Sanofi’s sterile fill-finish site in New Jersey, expanding capacity to produce critical medicines. And, thje company sealed a collaboration with OpenAI to embed AI more deeply across its operations, products, and services to accelerate drug development and scientific discovery

A chance to grab a bargain?

Consensus estimates for 2025 suggest US$44.3bn revenue which is 3% ahead of 2024, but no higher than 2022 levels. The bottom line consensus is $17.85 EPS, up from US$16.53 the year before. For 2026, $46.5bn revenue and $19.80 EPS; followed by US$49.1bn revenue and $22.54 EPS.

The mean target price among the 21 analysts who cover the stock is $613.58 a 6% premium to the current share price. And this represents 23.5x P/E for CY26, along with a 20.8x EV/EBITDA and a 3.1x PEG.

One thing to note is that although the company is a dividend payer, it is a bigger fan of share buybacks, so income investors should look elsewhere. Nonetheless, growth-oriented investors wanting the chance to buy a great company at a low price have a great opportunity here.