What’s the Upside Potential of Thermo Fisher Scientific Stock?


Sep. 19 2018, Updated 1:12 p.m. ET

Valuation metrics

So far in 2018, Thermo Fisher Scientific (TMO) stock has generated double-digit returns for investors. Boosted by its strong financial performance, it’s risen from $192.98 on January 2 to its current level of $240 in September.

Thermo Fisher’s EV (enterprise value) is $116.12 billion, and its EV-to-revenue ratio is 5.03x. The stock is trading at a forward PE multiple of 19.53x. Its price-to-sales ratio is 4.17x, and its price-to-book ratio is 3.64x. The company generated EBITDA per share of $12.9 in 2017 compared to $10.44 in 2015, and it’s expected to see a further increase to $16.4 in 2019.

Thermo Fisher authorized a share repurchase program worth $2.0 billion in September. It approved a $1.5 billion share repurchase program, of which $250 million is remaining, in 2016.

TMO’s current ratio, a metric of how effectively a company can meet its short-term obligations, stands at 1.60. In comparison, the current ratios of its peers Intuitive Surgical (ISRG), Medtronic (MDT), and Stryker (SYK) stand at 6.0, 2.50, and 1.80, respectively.

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Upside potential

In September, of the 16 analysts covering Thermo Fisher Scientific, 14 have given it “buy” or higher ratings, and two have given it “hold” ratings. The mean rating for Thermo Fisher stock is 1.63, and its target price is $252.86, implying an upside potential of 5.8% over its closing price of $239.10 on September 18.

In comparison, Intuitive Surgical, Medtronic, and Stryker have mean ratings of 2.06, 2.24, and 1.93, respectively, and target prices of $565.8, $102.45, and $184.43, respectively.


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