Thermo Fisher (TMO) delivered a strong 4Q25 performance, with revenue up by7.2% YoY (the fastest quarterly growth within 2025) and adj. EPS up by 7.7%,beating Bloomberg consensus by 2.2%/ 1.9%, respectively. The upbeat growth inthe quarter was firmly supported by the solid performance of bioproduction,research and safety channel, analytical instruments, and CDMO services. Mgmt.initiated the 2026 full-year guidance, expecting revenue to grow by 3.9% to 5.9%YoY and adj. EPS to increase by 5.9% to 8.4% YoY. Mgmt. reiterated its longterm organic revenue growth target of 3%-6%, indicating a continuously positiveoutlook. Maintain BUY rating with a new TP of US$670.\r
Demand from pharmaceutical customers rebounded steadily. Pharmaand biotech companies were the most robust client segments in 2025 forTMO, achieving a mid-single-digit revenue growth for the year as well as ahigh-single-digit growth in 4Q25. Mgmt. indicated that discussions with theseclients in early 2026 revealed that pharma companies are confident aboutnavigating their relationships with governments. Moreover, biotech financingrecovered in 2H25, translating into exceptionally positive feedback frombiotech clients. Despite a typical lag of ~six months between funding and R&Dexpenditure, mgmt. believes increased demand from biotech firms will be apivotal driver of revenue growth going forward. Although equipment demandremains muted amid the budget constraints within US governmental andacademic clients, there is sustained strong demand for innovative instrumentsamong pharmaceutical customers, per mgmt.\r
Strategic acquisitions enhancing core competencies. In 2025, TMOcompleted acquisitions of Solventum’s (SOLV US, NR) filtration & separationbusiness for US$4.0bn and Sanofi’s (SNY US, NR) sterile fill-finish facility inNew Jersey, alongside announcing its intention to acquire Clario, a clinicalendpoint data services provider, for US$8.9bn. These acquisitions should notonly bolster its global leadership in bioproduction but also expand its DPcapacity within the U.S., enabling itself to meet rising onshore productiondemands amid current geopolitical uncertainties, in our view. By integratingthese valuable assets, mgmt. expected adj. EPS to expand by 7-9% in 2026.\r
Strengthening one-stop service capabilities. TMO's competitive edge inthe global life sciences sector is effectively supporting its CDMO and clinicalCRO operations. CDMO segment experienced strong growth in 2025,benefiting from the constrained sterile fill-finish capacity worldwide. Byacquiring Sanofi’s facility, the Company is poised to secure growing ordersfor production in the U.S., supporting accelerated growth in the coming years.Meanwhile, clinical CRO improved sequentially with mid-single-digit growthin 4Q25, with order growth outpacing revenue growth. Combining CDMO andclinical CRO capabilities, the integrated Accelerator business aims to improveproject execution and shorten time-to-market for innovative drugs, therebygenerating meaningful orders through the differentiated service offerings.\r
Maintain BUY. We slightly raise TP from US$654 to US$670 (based on a10-year DCF model with WACC of 8.16% and terminal growth of 2.0%),factoring into our positive outlook on overall demand trend. We forecastTMO’s revenue to grow by 5.1%/ 6.5%/ 6.7% YoY and adj. EPS to increaseby 7.4%/ 8.9%/ 9.4% YoY in 2026E/ 27E/ 28E, respectively.
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