Citi sets $620 target on Thermo Fisher stock, sees limited upside

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On Monday, Citi resumed coverage on Thermo Fisher Scientific (NYSE:) with a Neutral rating, setting a price target of $620. The financial institution provided insights into the company’s current market position, stating that the valuation is seen as fair.

Thermo Fisher’s 2024 guidance, which includes core organic growth ranging between a decrease of 1% and an increase of 1%, an adjusted Operating Profit Margin (OPM) of 22.3-22.8%, and an Earnings Per Share (EPS) forecast of $20.95 to $22.00, was cited as a reasonable basis with limited potential for an increase in figures due to the expected margin improvement in the second half of the year.

The company anticipates organic revenue growth in the first quarter of 2024 to surpass the fourth quarter of 2023 by approximately 1-2 percentage points. However, the expected OPM for the first quarter is projected to be below 21%, influenced by headwinds from incentive compensation. Citi acknowledged Thermo Fisher’s strong market presence as a diversified entity and noted that the management has taken steps to minimize risks for the current year, not counting on any improvement in China’s market conditions.

Despite the recent expansion in the company’s multiples, Citi’s projections for 2025 remain below the consensus, which has led to the establishment of a Neutral rating. The updated model from Citi includes the fourth quarter data and the guidance provided for 2024, reflecting the firm’s latest expectations for Thermo Fisher’s financial performance.

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