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Let's talk about the popular Thermo Fisher Scientific Inc. (NYSE:TMO). The company's shares saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s examine Thermo Fisher Scientific’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
What is Thermo Fisher Scientific worth?
Thermo Fisher Scientific appears to be overvalued by 25.74% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$292 on the market compared to my intrinsic value of $232.42. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Since Thermo Fisher Scientific’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
Can we expect growth from Thermo Fisher Scientific?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Thermo Fisher Scientific’s earnings over the next few years are expected to increase by 30%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in TMO’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe TMO should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on TMO for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for TMO, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Thermo Fisher Scientific. You can find everything you need to know about Thermo Fisher Scientific in the latest infographic research report. If you are no longer interested in Thermo Fisher Scientific, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.