1Q26 results: Maintaining organic growth target
1Q26 results: Maintaining organic growth target Target PriceUS$620.00(Previous TPUS$670.00)Up/Downside32.0%Current PriceUS$469.71 Thermo Fisher(TMO) reported 1Q26 revenue of US$11.01bn, up 6.2% YoY, withadj. EPS of US$5.44, up 5.6%YoY,primarily driven by bioproduction, CDMO andclinical CRO operations. Analytical instruments posted a 2% decline in organicrevenue, weighed down bythesoft demand from academic and government end-markets in bothUS and China. 1Q26revenue/adj.EPSbeatBBGconsensusby1.5%/3.8%, respectively.On the back of stronger-than-expected 1Q26 resultsandconsolidation of Clario, mgmt. raisedfull-year guidance,expecting revenuegrowth of 6.2-8.0% YoY (previously 3.9-5.9%)with organic revenue growthmaintained at 3-4%, and adjEPS growth of 7.8-9.9% (previously 5.9-8.4%). China HealthcareBenchen HUANG, CFAhuangbenchen@cmbi.com.hk Proactive response tochallenging global macro environment.Mgmt.acknowledgedthat the Middle East conflict has introduced incrementalinflationarypressure,and has built in a buffer within its guidance toaccommodatepotential increases in supply-chain and logistics costs.Furthermore,mgmt.noted that US manufacturing reshoring has transitionedfrom policy rhetoric to tangible orders,anticipatingCDMO and bioproductionservices to benefit from such trend during 2027-28. For instance, certaincustomers have already committed to leveraging TMO’s capacity to fulfiltheirproduction reshoring plans, while expansion/upgradeto existing US facilitiesaregenerating incremental demand for bioproduction solutions. Jill WU, CFA(852) 3900 0842jillwu@cmbi.com.hk Organic growth target maintained.TMO delivered 1% organic growth in1Q26 (vs. +2% YoY in 2025), whichmgmt.attributed to fewer selling daysand the timing ofCDMOrevenue (~1pptdragfor each).Supported by a lowbase in analytical instruments following last year’s tariff implementation,additional selling days in 4Q26, and the inherent seasonality of CDMOservices,mgmt.guided to~3% organic growth in 2Q26 and maintained itsfull-year organicgrowthtargetof 3–4%, signalling confidence in the annualoutlook despite macro uncertainties. Notably, mgmt.did not fully flow throughthe 1Q26 outperformance intoits full-year guidance, preserving cushiontomitigate potential inflationary risks stemming fromtheMiddle East conflict. Immediate financial accretion and strategic synergy from the Clarioacquisition.The landmark US$8.9bn acquisitionof Clario,a leading providerof endpoint datafor clinical trials,was completed in Mar2026. Mgmt.expectsClario’sconsolidation to contribute US$0.9bn in revenue and US$0.32 in adj.EPSin 2026, providing a meaningful incremental boost to full-yearresults.Strategically, Clariois highly complementary to TMO’s clinical researchbusiness. We believe the integration of Clario’s data assets with TMO’s AIstrategy could forge a deeper technological moat within theglobalclinicalresearch services market. Source: FactSet Maintain BUY.To reflectClario’sconsolidationand macro uncertainties, weraiseforecastonTMO’s revenuebut keeparelatively conservativeviewonbottomline. We forecast revenueto grow by 6.6%/ 6.5%/ 6.7% YoYand adj.EPS to increase by 7.7%/ 6.6%/ 8.9% YoY in 2026E/ 27E/ 28E, respectively.Wecut TP fromUS$670to US$620(based on a 10-yearDCF model withWACC of 8.16% and terminal growth of 2.0%)to factorinmacro uncertainties. Disclosures& Disclaimers Analyst CertificationThe research analyst who is primary responsible for the content of this researchreport, in whole or in part, certifies that with respect to the securities or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about the subject securities or issuer; and (2)no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific views expressed by that analyst in this report.Besides, the analyst confirms that neither the analyst nor his/her associates (as defined in the code of conduct issued by The Hong Kong Securities and Futures Commission) (1) have dealt in or traded in the stock(s) covered in this research report within 30 calendar days prior to thedate of issue of this report; (2) willdeal in or trade in the stock(s) covered in this research report 3 business days after the date of issue of this report; (3) serve as an officer of any of the HongKong listed companies covered in this report; and (4) have any financial interests in the Hong Kong listed companies coveredin this report. CMBIGM RatingsBUY : Stock with potential return of over 15% over next 12 monthsHOLD: Stock with potential return of +15% to-10% over next 12 monthsSELL: Stock with potential loss of over 10% over next 12 monthsNOT RATED: Stock is not rated byCMBIGM :Industry expected to outperform the relevant broad market benchmark over next 12 months:Industry expected to perform in-line with the relevant broad market benchmark over next 12 months:Industry expected to underperform the relevant bro
