QS Research · Michael Burry's Scion Capital analyst template · 2006
THERMO FISHER SCIENTIFIC INC. (TMO)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case -9% · downside -24% · upside +10%
Thermo Fisher is a better business than its own long-term record shows — Q3 2026 organic growth accelerated to 6%, adjusted operating margin reached 24.5% and TTM free cash flow is $7.60B on $47.35B of revenue — but the market already pays the top of the usable peer band for it: 30.3x EV/EBITDA, 36.3x P/E and a 3.0% FCF yield against a peer range of 24.7x-30.3x EV/EBITDA and 31x-37x P/E. Valued the secular way, on today's TTM earnings and cash flow and never on an average, 26x-30x EV/EBITDA on $9.71B gives $252.5B-$291.3B EV, less $37.31B net debt = $215.2B-$254.0B equity, or $581-$686 per share (370.52M shares) — a base case of roughly -9%. The tails are $528 (-24%) at 24x and $764 (+10%) at 33x, so the risk/reward is skewed down at about 0.4:1, but the short rule (base -30% with upside ≤ +25%) is not met, hence a watch rather than a short. What is not in the base case is a margin normalization: FY2021 earned a 25.6% operating margin, and that rate on today's $47.35B revenue would be $12.12B EBIT plus $1.24B D&A = $13.36B EBITDA, worth $837-$982 per share (+21% to +42%) at 26x-30x — that option, not the current multiple, is the whole upside debate.
Key numbers
- Share price: $693.02
- Market cap: $256.78B
- Latest financial period: TTM to Sep 26, 2026
- Revenue (TTM): $47.35B
- EV / EBITDA (TTM): 30.3x
- P/E (TTM): 36.3x
- Price / book: 4.69x
The 15 boxes
- ✓ 1. Long-form business notes
Thermo Fisher (TMO) sells instruments, reagents/consumables and outsourced pharma services to pharma/biotech, clinical, academic and industrial customers through four segments (Life Sciences Solutions, Analytical Instruments, Specialty Diagnostics, Laboratory Products and Biopharma Services), a direct sales force of roughly 14,000 people and third-party distributors. FY2020 revenue of $32.22B rose to a $44.91B peak in FY2022, flattened to $42.86B and $42.88B in FY2023-FY2024, and reached $44.56B in FY2025, while operating income of $7.75B in FY2025 still sits below the $10.03B earned in FY2021. Between the FY2020 and FY2025 reports the company roughly grew headcount from more than 80,000 to about 125,000 colleagues, renamed Laboratory Products and Services to Laboratory Products and Biopharma Services, collapsed Life Sciences from four primary businesses to three, and added PPD to its brand list. FY2025 operating cash flow of $7.82B was the weakest of the six years shown, against $1.52B of capex and $3.00B of buybacks.
- ✓ 2. Competitive advantage
The sources show a broad, diversified franchise with scale (FY2025 revenue $44.56B, net income $6.70B, operating cash flow $7.82B) but they do not evidence a durable moat: the 10-K says the company meets 'aggressive and able' competition in virtually all markets and lists product performance, reputation, service and relative price — not switching costs, patents or licences — as the competitive levers. The numbers argue against pricing power: operating margin fell from 24.2% in FY2020 to 17.4% in FY2025, FY2025 revenue is still below the FY2022 peak of $44.91B, and FY2025 operating cash flow is below FY2020's on 38% more revenue. Advantage, on this evidence, is portfolio breadth and customer reputation defended by continuous R&D, funded partly by an acquisition-built asset base carrying $65.19B of goodwill and intangibles against $53.41B of FY2025 equity.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended 2026-09-26) revenue was $12,137M versus $11,122M in Q3 2025, up 9%, with 6% organic growth; adjusted operating margin was 24.5% and adjusted EPS was $6.68. Nine-month 2026 free cash flow was $4,618M, and the company repurchased $4.00B of stock, leaving $1.00B available at 2026-10-30. The 10-Q gives capex, tax and liquidity outlook but no revenue/EPS guidance or inventory balance; S29 adds no new risk factors.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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