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On Wednesday, TD Cowen adjusted its outlook on Thermo Fisher Scientific (NYSE:TMO), reducing the price target to $600 from the previous $686, while maintaining a Buy rating on the shares. The revision comes as the stock trades near its 52-week low at $416.64, with InvestingPro data showing the stock has declined over 14% in the past week. The revision follows a reassessment of the company's financial projections due to a declining U.S. Academic sector and the potential impact of tariffs.
Analysts at TD Cowen have revised their first-quarter estimates and the full-year 2025 forecast for Thermo Fisher Scientific based on a recent survey that indicates a 5% downturn in the U.S. Academic segment for the first quarter. The firm has also adjusted its full-year organic growth forecast to 3.2%, a decrease from 3.6%, which is below the company's guidance of 3-4% and the consensus estimate of 3.5%. Despite these challenges, InvestingPro data shows the company maintains a GOOD Financial Health Score, supported by strong profitability metrics.
The earnings per share (EPS) forecast has been lowered to account for the initial effects of tariffs, although Thermo Fisher has provided limited disclosure regarding the tariff's impact. Despite these challenges, TD Cowen believes Thermo Fisher's stock is currently trading at an appealing price, approximately 19 times the projected 2025 earnings.
TD Cowen highlights the strength of Thermo Fisher's recession-resistant portfolio and the management team's track record of navigating tough periods as reasons for maintaining a Buy rating. The reduction in the price target to $600 is primarily attributed to the compression of the S&P 500 multiple, which has influenced the firm's target multiple for Thermo Fisher.
In other recent news, Solventum has agreed to sell its Purification & Filtration business to Thermo Fisher Scientific for $4.1 billion. This strategic move is part of Solventum's transformation plan to enhance its focus and improve financial metrics. Solventum plans to use approximately $3.4 billion from the net proceeds primarily for debt reduction, which is expected to strengthen its balance sheet. The transaction, expected to close by the end of 2025, is projected to be neutral to Solventum's earnings per share in 2025. Meanwhile, activist investor Trian Fund Management is pushing Solventum to separate additional businesses, such as its dental products and software divisions, to focus on its medical and surgical unit. Trian, which holds a 5% stake in Solventum, has suggested that the company's costs are excessively high, impacting profits. Thermo Fisher, which will integrate Solventum's filtration business into its Life Sciences Solutions segment, has also announced a 10% increase in its quarterly cash dividend to $0.43 per share. Additionally, Thermo Fisher has appointed Karen S. Lynch, a seasoned healthcare executive, to its Board of Directors, expanding the board to twelve members.
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