Everyone Saw The Punch, No One’s Watching The Recovery

Thermo Fisher Scientific (TMO) just took a hit, but don’t mistake that for a knockout. This is a seasoned player, bloodied perhaps, but still very much in the game.

The fundamentals are bruised, not broken. And for those who can look past the surface damage, the setup is starting to look unusually compelling.

The company has been navigating a minefield.

Trade policy whiplash, China tariffs, NIH budget uncertainty. It’s the kind of macro mess that would shake up even the most stable names in life sciences.

TMO didn’t escape unscathed, but it also didn’t flinch. That alone should catch your attention.

Despite all the turbulence, Q1 revenue landed at $10.36 billion. That’s $130 million ahead of expectations.

Organic growth hit 1%. Not fireworks, but not a fizzle either.

Keep in mind, this came with fewer selling days and the lingering drag from post-pandemic overhang. This is what resilience looks like. It’s not loud. It’s steady.

Bioproduction and pharma services are showing signs of stabilization. Not dramatic, but meaningful.

This isn’t a patient in intensive care. It’s one walking out of the hospital asking where the next meal is. Sometimes, that’s all you need to know about a business’s trajectory.

On the China front, the narrative might be shifting.

Everyone was laser-focused on that $400 million revenue hit from tariffs. But here’s the twist. In May, those tariffs were temporarily cut.

If that reprieve holds, or even just lingers longer than expected, the pressure on forward guidance could ease considerably.

Then there’s the manufacturing migration. American pharma is reshoring production. It’s happening quickly and with intent.

Thermo Fisher is one of the few names that already has the infrastructure to capture that shift. When the industry starts rethinking its supply chains, you want to be the one holding the keys to the new factories – TMO is.

From a valuation standpoint, this is where it gets even more interesting.

Right now, the stock trades at 19.1 times FY25 earnings and 17.4 times FY26. That’s well below the five-year forward average of 24.4 times.

Think about what that means.

You’re looking at a world-class business, positioned to benefit from structural trends, and it’s being priced like it’s on the ropes. That’s not a common setup.

Margins have taken a hit. They slipped to 21.9% in Q1, down 10 basis points.

But Thermo Fisher has tools most companies don’t. Their PPI Business System isn’t window dressing. It’s a proven method for driving operational efficiency.

Combine that with their ability to push through 2% pricing increases and improve supply chains, and there’s a real path to margin recovery in 2026.

None of this is to say the risks have vanished.

If the China tariff relief evaporates, the previous pain returns. And if biotech funding dries up, the demand picture gets murkier.

But these are known risks. The kind that markets have already priced in.

What they haven’t priced in is the possibility of recovery. Apply the historical multiple of 24.4 times to FY26 earnings and the price target sits near $602.

That implies about 40% upside. Not fantasy, just math. This isn’t a broken story. It’s a recovering one.

And in a market still fixated on perfection, there’s something refreshing about a name like Thermo Fisher. It has real earnings, real assets, and a clear role in the next leg of pharma’s evolution.

Quality on sale is rare. This is one of those moments.

Besides, investing has never been about catching falling knives or chasing momentum. It’s about finding companies that are misunderstood in the short term and underappreciated in the long term.

TMO fits that mold. Keep it on your radar.