Could Thermo Fisher Scientific Inc. (NYSE:TMO) be the unsung hero of the biopharma sector's future? While its stock performance has recently lagged, analysts are betting on a major turnaround driven by strategic acquisitions and robust growth potential. William Blair initiated coverage on Tuesday on Thermo Fisher Scientific, citing a strong balance sheet and impressive M&A track record.
Analyst Matt Larew notes that Thermo Fisher has outperformed the S&P 500 over the past decade, delivering a 290% return since 2015, compared to the index's 213%.
However, shares have lagged in recent years, falling 27% since the end of 2021 while the S&P gained more than 30%.
This pullback is in line with peers, as life science tools companies and pharma services firms are down 45% and 17% on average, respectively, over the same period.
Since 2017, Thermo has made significant acquisitions and organic investments to bolster its biopharma services offerings, accounting for over 60% of laboratory products and biopharma services revenue and roughly one-third of total company sales.
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Thermo Fisher Scientific reported second-quarter 2025 adjusted earnings of $5.36 per share, beating the street view of $5.23.
Quarterly sales of $10.86 billion increased 3% year-over-year, beating the analyst consensus estimate of $10.68 billion. Organic revenue growth was 2%.
To navigate Trump tariff challenges, Thermo Fisher Scientific announced it would invest an additional $2 billion in the U.S. over the next four years.
William Blair models $27.17 of EPS in 2027 in the base-case scenario. The analyst writes that the resolution of current headwinds and further appreciation for Thermo's one-stop-shop pharma partnership strategy will help the multiple improve from near lows to roughly 22 times, near its 10-year average of 22.4x, yielding a share price of roughly $598 at the end of 2026, or 22% upside to current levels.
The analyst initiated with an Outperform rating.
“For investors looking to play a recovery in the broader life science tools and pharma services space, there is no better large-cap option than Thermo, in our opinion,” the analyst wrote.
Thermo's positive outlook stems from its growing services business, strengthening its role as a key biopharma partner.
Larew further says that with a solid balance sheet and strong M&A track record, the company is well-positioned to expand further in high-growth areas like bioproduction.
William Blair sees Thermo's broad scale and partner-of-choice status in pharma and biotech, positioning it to gain market share and emerge stronger from near-term challenges.
Thermo Fisher is considered the biopharma industry’s partner of choice through future acquisitions.
“We expect M&A activity to remain a significant part of Thermo's near- and long-term strategy, with the company leveraging its strong record to drive further improvements in ROIC over time,” the analyst wrote in the initiation note.
TMO Price Action: Thermo Fisher Scientific shares were up 2.16% at $498.07 at the time of publication on Tuesday, according to Benzinga Pro data.
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