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If you are wondering whether Thermo Fisher Scientific's current share price lines up with its underlying worth, you are not alone. This article walks through that question step by step.
The stock last closed at US$578.61, with returns of a 7.6% decline over 7 days, 2.3% decline over 30 days, 2.3% decline year to date, 2.9% decline over 1 year, 0.7% decline over 3 years and 19.0% over 5 years, which may have caught the eye of investors thinking about risk and entry points.
Recent news around Thermo Fisher Scientific has focused on its role as a large player in life sciences tools and diagnostics, with investors watching how its scale and breadth of products shape sentiment on the stock. This broader context helps frame why the share price can shift even when the long term story feels steady.
Thermo Fisher Scientific currently scores 2 out of 6 on our valuation checks. Next we will look at how different methods such as multiples and cash flow models line up on price, before finishing with a more complete way to think about valuation that goes beyond the headline numbers.
Thermo Fisher Scientific scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
A Discounted Cash Flow, or DCF, model takes estimates of the cash a business might generate in the future and discounts those amounts back to today to arrive at an estimate of what the company could be worth per share right now.
For Thermo Fisher Scientific, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is about $6.3b. Analysts provide forecasts for several years, and beyond that point Simply Wall St extrapolates the cash flows. In this case, the ten year projections run out to 2035, with forecast free cash flow in 2028 of $9.8b and further estimated figures after that based on gradual growth assumptions.
Taking all those projected cash flows, discounting them back to today and adjusting for equity gives an estimated intrinsic value of about $530.15 per share. Compared to the recent share price of $578.61, the DCF output suggests the stock is roughly 9.1% overvalued on this model.
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 a profitable company like Thermo Fisher Scientific, the P/E ratio is a useful way to think about what you are paying for each dollar of earnings. It links the share price directly to the underlying profit, which is what ultimately supports a company’s value over time.
What counts as a “normal” P/E depends on how the market views a company’s growth outlook and risk. Higher expected earnings growth or lower perceived risk can justify a higher P/E, while slower growth or higher risk usually points to a lower, more conservative multiple.
Thermo Fisher Scientific is currently trading on a P/E of 32.43x. This sits below the Life Sciences industry average of 37.31x, and also below the peer average of 34.06x. In other words, the stock is not trading at the top of its group on this metric. Simply Wall St’s Fair Ratio for Thermo Fisher Scientific is 31.28x, which is its own estimate of an appropriate P/E given factors such as earnings growth, industry, profit margin, market cap and key risks.
The Fair Ratio can be more useful than a simple peer or industry comparison because it tries to adjust for the specific profile of the company rather than relying on broad group averages.
With the actual P/E of 32.43x only modestly above the Fair Ratio of 31.28x, the shares screen as slightly expensive on this metric, but not by a wide margin.
Upgrade Your Decision Making: Choose your Thermo Fisher Scientific Narrative
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simple stories you build around Thermo Fisher Scientific that connect your view of its future revenue, earnings and margins to a financial forecast and then to a fair value. On Simply Wall St, within the Community page used by millions of investors, you can quickly set your own assumptions, see the fair value that falls out of those numbers, and compare it with the current share price to help you decide whether Thermo Fisher Scientific looks more like a buy, a hold, or a sell for you. Because Narratives update automatically when fresh information such as news or earnings is added, your story and fair value stay current without you having to rebuild a model each time. For example, one investor might set a higher fair value for Thermo Fisher Scientific based on confidence in its life sciences tools and diagnostics position, while another might choose a lower fair value if they prefer more conservative expectations for future margins and growth.
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.
