Stephens initiated coverage on Thermo Fisher Scientific (NYSE:TMO) and cited the company as an industry leader in the broader life science tools/services/ diagnostics industry, with fiscal year 2023 sales of almost $42.9 billion.
The analyst highlights Thermo Fisher's extensive product and service portfolio and its significant revenue base. Over the past decade, the company has expanded its presence in the biopharma sector through strategic mergers and acquisitions, enhancing its market exposure.
Also Read: Thermo Fisher Q2 Earnings: Marginal Revenue Dip, Completes Olink Acquisition, Lifts Annual Profit Outlook.
Thermo Fisher has around 18% share of the estimated total addressable market at more than $235 billion.
Stephens says disciplined M&A strategy and organic growth opportunities have the potential to support a long runway for long-term growth and margin expansion.
Thermo Fisher's pharma services assets, especially its contract development and manufacturing organization (CDMO), are well positioned in today's market. The company is set to capitalize on growth opportunities in the injectables sector, driven by GLP-1 demand, and in biologics drug substance production, supported by the BIOSECURE bill.
Stephens analyst writes, "After a difficult couple of years for the broader LS tools complex, 2025 should be a better year, but we have tried to assume a gradual recovery in our estimates."
Stephens initiated coverage with an Overweight rating and a price target of $680.
The company's Practical Process Improvement (PPI) system fosters ongoing enhancements and plays a crucial role in realizing synergies from acquisitions.
However, pursuing larger mergers and acquisitions may face greater challenges due to Thermo Fisher's large scale and the heightened scrutiny of an active Federal Trade Commission.
Despite this, Thermo Fisher's diverse portfolio offers ample organic growth potential, and there are still M&A opportunities, particularly in bioprocessing, cell and gene therapy markets, and related service areas, per the analyst.
Price Action: TMO stock is down 0.83% at $613.45 at last check Tuesday.
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