We came across a bullish thesis on Thermo Fisher Scientific Inc. (TMO) on Substack by FluentInQuality. In this article, we will summarize the bulls’ thesis on TMO. Thermo Fisher Scientific Inc. (TMO)'s share was trading at $523.64 as of March 3^rd. TMO’s trailing and forward P/E were 31.68 and 22.47 respectively according to Yahoo Finance.

A medical laboratory surrounded by advanced equipment, symbolizing the company's cutting-edge innovation in healthcare.

Thermo Fisher Scientific is a global leader in scientific instruments, laboratory equipment, reagents, and software, serving the biotech, pharma, healthcare, and research industries. The company has built a reputation for precision, reliability, and innovation. Its revenue model is driven by laboratory solutions, life science tools, and analytical instruments, but the real strength lies in its recurring revenue streams—consumables and essential lab services that ensure consistent demand. Scientists and researchers rely on Thermo Fisher for accuracy, efficiency, and seamless integration, making its products indispensable in advancing science and medicine.

Beyond just selling lab equipment, Thermo Fisher plays a critical role in enabling breakthroughs and driving medical and scientific progress. Its strong financials reflect this high-quality positioning, with a gross profit margin of 41.3%, an operating margin of 17.9%, and a free cash flow margin of 16.9%. The company has consistently generated shareholder value, supported by disciplined capital allocation and modest buybacks that provide an additional boost to per-share growth. Long-term earnings per share are expected to grow at 9.6%, backed by a five-year revenue CAGR of 10.9%.

With an average return on invested capital (ROIC) of 11.2% and return on capital employed (ROCE) of 12.1% over the past five years, Thermo Fisher demonstrates strong capital efficiency. Its financial resilience, combined with a steady stream of recurring revenue and a reputation for quality, makes it a compelling long-term investment. As research, biotech, and healthcare continue to expand, Thermo Fisher remains positioned to capture sustained growth and deliver long-term value.

Thermo Fisher Scientific Inc. (TMO) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 100 hedge fund portfolios held TMO at the end of the fourth quarter which was 98 in the previous quarter. While we acknowledge the risk and potential of TMO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TMO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.