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Why Thermo Fisher (TMO) Stock Is Trading Up Today

TMO Cover Image

What Happened?

Shares of life sciences company Thermo Fisher (NYSE: TMO) jumped 2.7% in the afternoon session after Barclays upgraded the stock to Overweight from Equalweight and boosted its price target, citing a more attractive valuation and clearer growth outlook. 

The investment bank raised its price target on Thermo Fisher to $550 from $490, noting the stock has become a “relatively compelling entry point” after falling 24% since September 2024 while the S&P 500 gained 19%. Barclays stated that Thermo Fisher's valuation has come down to more attractive levels and that its end-market demand is stable and expected to improve. Analysts at the firm believe the earnings per share cuts are “mostly behind” the company. They also pointed to management's mid-term financial targets, which have addressed investor concerns about future earnings risk, and noted that increased company disclosures provide better clarity on business drivers.

After the initial pop the shares cooled down to $489.14, up 2.7% from previous close.

Is now the time to buy Thermo Fisher? Access our full analysis report here, it’s free.

What Is The Market Telling Us

Thermo Fisher’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The previous big move we wrote about was about 1 month ago when the stock gained 3% on the news that positive inflation data fueled hopes for an interest rate cut by the Federal Reserve. 

The latest Consumer Price Index (CPI) report showed inflation rose by a modest 0.2% in July and 2.7% over the last year. This cooler-than-expected data prompted a significant market rally, with the S&P 500, Dow, and Nasdaq all climbing as investors grew more optimistic. The prevailing view is that easing inflation gives the central bank room to lower interest rates. Lower rates typically reduce borrowing costs for businesses and make stocks more attractive relative to bonds, contributing to widespread gains across sectors like healthcare.

Thermo Fisher is down 6.4% since the beginning of the year, and at $489.14 per share, it is trading 21.1% below its 52-week high of $620.25 from September 2024. Investors who bought $1,000 worth of Thermo Fisher’s shares 5 years ago would now be looking at an investment worth $1,135.

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