On Thursday, Citi maintained its Neutral rating on Thermo Fisher Scientific (NYSE:TMO) shares with a consistent price target of $620.00. The decision comes as Thermo Fisher reiterated its long-term guidance ahead of its Investor Day. The company confirmed its expectations for 7-9% organic growth, which aligns with a 4-6% market growth forecast. Moreover, Thermo Fisher anticipates organic margin expansion of 40-50 basis points and mid-teens percentage growth in adjusted earnings per share (EPS).
Thermo Fisher did not specify an exact figure for capital deployment but outlined a strategy that includes 60-75% of funds directed towards mergers and acquisitions (M&A) and 25-40% allocated for dividends and share buybacks.
For 2024, the company reaffirmed its previous guidance, projecting a core organic growth range from a 1% decline to a 1% increase, which translates to revenues between $42.4 billion and $43.3 billion. The company also expects an adjusted operating profit margin (OPM) between 22.5% and 22.8%, and an adjusted EPS within the range of $21.29 to $22.07.
The reiteration of the long-range plan (LRP) by Thermo Fisher was anticipated and is perceived as a non-event with no significant surprises. The focus now shifts to the management's discussion for further details on the underlying assumptions of the guidance.
Key topics of interest include the impact of the Chinese market, bioproduction dynamics, expectations for M&A activities, and an analysis of the services businesses. No forward-looking commentary for fiscal year 2025 was provided, with updates expected to be announced in January.
In other recent news, Thermo Fisher Scientific demonstrated a strong financial performance, with second-quarter revenue reaching $10.54 billion, driving growth across all business segments. This led to an upward revision of its full-year guidance.
The company also received approval for its $3.1 billion acquisition of Swedish biotech firm, Olink Holding AB (NASDAQ:OLK), from the UK competition authority, enhancing its position in the global life sciences industry. Thermo Fisher declared a quarterly cash dividend of $0.39 per share, underlining its commitment to investors.
In the face of these developments, Deutsche Bank adjusted its outlook on Thermo Fisher, raising the price target to $630 and reiterating a Buy rating on the stock. The firm also updated its 2025 earnings per share (EPS) estimates for Thermo Fisher, reducing them by 3% due to a more conservative forecast for the recovery of overall market conditions.
BofA Securities, TD Cowen, and Jefferies also increased their price targets for Thermo Fisher, indicating confidence in the company's future prospects. These recent developments underscore the positive trajectory Thermo Fisher is expected to maintain in the coming years.
InvestingPro Insights
As Thermo Fisher Scientific (NYSE:TMO) continues to navigate its strategic financial path, InvestingPro data underscores the company's market stance with a robust market capitalization of $235.06 billion. Despite a slight dip in revenue growth over the last twelve months as of Q2 2024, the company maintains a substantial gross profit margin of 40.69%, which complements their strategy for organic margin expansion. The commitment to shareholder returns is evident with a dividend growth of 11.43% in the same period, reflecting the company's financial health and consistent reward to investors.
InvestingPro Tips reveal that Thermo Fisher has been actively returning value to its shareholders through share buybacks and dividend increases, marking 6 consecutive years of dividend raises. This is a testament to the company's stable financial performance and commitment to its investors. Moreover, Thermo Fisher is recognized as a prominent player in the Life Sciences Tools & Services industry, which may provide a competitive edge in achieving the organic growth they anticipate.
For investors seeking more in-depth analysis, InvestingPro offers additional tips on Thermo Fisher, including insights on valuation multiples and stock volatility. With 15 more InvestingPro Tips available, interested parties can explore a comprehensive view of TMO's financial landscape at https://www.investing.com/pro/TMO.
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