- If you are wondering whether Thermo Fisher Scientific at around US$490 per share is pricing in too much optimism or not enough, this article breaks down what that current price tag might really mean for you.
- The stock has moved 5.6% over the last 7 days, while returns sit at a 5.0% decline over 30 days, a 17.2% decline year to date and a 4.1% decline over the past year, with a 10.8% decline over 3 years and a 9.0% gain over 5 years.
- Recent headlines around Thermo Fisher Scientific have focused on its role as a major supplier of life sciences tools and diagnostics, as well as its position in supporting pharmaceutical research and testing. These themes help frame how investors are thinking about the company’s long term demand picture and the risks that come with it.
- On Simply Wall St’s valuation checks, Thermo Fisher Scientific scores 5 out of 6, as shown in its valuation score. Next, you will see how methods like discounted cash flow and multiples compare, along with a different way of thinking about value that comes at the end of the article.
Approach 1: Thermo Fisher Scientific Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model estimates what a company might be worth by projecting its future cash flows and discounting them back to today’s value. It focuses on the cash the business could generate for shareholders rather than short term market swings.
For Thermo Fisher Scientific, the latest twelve month free cash flow is about $6.3b. Using a 2 Stage Free Cash Flow to Equity model, analysts have provided explicit forecasts out to 2028, with free cash flow projected at $9.6b that year. Beyond that, Simply Wall St extrapolates cash flows through to 2035, with discounted values over that period ranging from about $6.6b to $7.7b each year.
When those projected cash flows are discounted back and aggregated, the model indicates an estimated intrinsic value of about US$512.87 per share. Compared with a current share price around US$490, the DCF output suggests the stock is roughly 4.3% undervalued, which sits in the “close to fair value” range rather than a deep discount.
Result: ABOUT RIGHT
Thermo Fisher Scientific is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.
Approach 2: Thermo Fisher Scientific Price vs Earnings
For profitable companies, the P/E ratio is a useful shorthand for how much you are paying for each dollar of earnings. It helps you gauge whether the current share price lines up with the earnings power of the business, rather than just its revenue or assets.
What counts as a “normal” P/E ratio usually reflects two big forces: how much growth investors expect in the future and how much risk they see in those earnings. Higher expected growth or lower perceived risk can support a higher P/E multiple, while slower growth or higher risk tends to justify a lower one.
Thermo Fisher Scientific currently trades on a P/E of about 27.19x. That sits below both the Life Sciences industry average P/E of about 30.73x and the peer group average of around 32.03x. Simply Wall St’s proprietary Fair Ratio for Thermo Fisher Scientific is 29.62x, which is an estimate of the P/E that could be reasonable given factors like earnings growth, profit margins, industry, market cap and specific risks. This Fair Ratio goes a step further than simple peer or industry comparisons because it adjusts for those company specific traits. With the current P/E below the Fair Ratio, the shares screen as undervalued on this metric.
Result: UNDERVALUED
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Upgrade Your Decision Making: Choose your Thermo Fisher Scientific Narrative
Earlier it was mentioned that there is an even better way to understand valuation. Narratives on Simply Wall St take things further by letting you connect your view of Thermo Fisher Scientific’s story with a concrete forecast for revenue, earnings, margins and a Fair Value per share. You can then compare that Fair Value with today’s price to help you decide whether the stock looks rich or reasonable based on your own assumptions.
On the Community page, you can pick or build a Narrative that fits how you see Thermo Fisher Scientific. That Narrative will keep updating as fresh data, news and earnings arrive, so your Fair Value view stays aligned with what is happening rather than frozen at one point in time.
For example, one investor might align with a more cautious Thermo Fisher Scientific Narrative closer to the US$450 Fair Value view that reflects softer revenue growth and a P/E near 24x. Another might prefer a more optimistic Narrative closer to the US$742.76 Fair Value view that uses higher revenue growth and a P/E above 34x. By comparing each Fair Value to the current share price, you can quickly see which story feels more realistic for you and how that might guide your buy or sell timing.
Do you think there's more to the story for Thermo Fisher Scientific? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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