Temporary headwinds have obscured the long-term strength of this global life sciences giant

With a 20-year CAGR of 14.1%, Thermo Fisher has repeatedly shown how temporary headwinds create long-term value for patient shareholders.
Jacob Celermajer

Cordis Asset Management

Thermo Fisher Scientific (NYSE: TMO) has been a cornerstone of the life sciences economy for over a century, and a compounding machine for investors. Since the merger between Thermo Electron and Fisher Scientific in 2006, the company’s stock has delivered a compound annual growth rate of 14.1%, turning long-term shareholders into outsized winners. 

However, over the past year its shares are down nearly 30%. Our view is that the drawdown looks less like a permanent impairment of capital and more like a rare window of opportunity for long-term investors.  

We believe this sell-off reflects three short-term pressures: i) global macroeconomic uncertainty, ii) trade policy volatility, and iii) the long-anticipated COVID-19 revenue runoff. But none of these factors diminish the structural drivers that have made Thermo Fisher one of the most consistent compounders in U.S. public markets.

Three Headwinds, All Transitory

1. Global macroeconomic uncertainty

Regional sales in China declined mid-single digits last quarter, reflecting macroeconomic softness. But Thermo Fisher’s global footprint and diversified end-market exposure allow it to absorb regional volatility without compromising the broader business operations.

2. Trade policy volatility

Tariffs imposed by China are projected to create a $400 million headwind in 2025, while U.S. policy changes targeting academic and clinical funding could shave off another $500 million. Thermo Fisher has already launched mitigation strategies, including supply chain realignment and commercial pivots. Management expects these impacts to “reduce fairly rapidly” beyond 2025.

3. COVID-19 revenue runoff
After surging during the pandemic, vaccine- and therapy-related revenue is normalizing. In Q1 2025, this was a 2% headwind in the Pharma and Biotech segment, with a residual 1% drag forecast for the full year. Our research points to a core growth that remains robust beneath this runoff, underscoring the strength of the company’s non-COVID franchises.



The Long-Term Model: Built to Compound

None of these short-term pressures change the fact that Thermo Fisher is one of the most resilient and strategically disciplined companies in the healthcare ecosystem.

A proven acquirer: since the 2006 merger of Thermo Electron and Fisher Scientific, the company has executed a textbook M&A playbook. Their bigger moves include acquiring Life Technologies (2014), PPD (2021), The Binding Site (2023), and Olink (2024), among others. These deals have expanded Thermo Fisher’s capabilities in diagnostics, contract research, and proteomics, each of which are high-growth, high-margin verticals.

Organic strength: beyond M&A, Thermo Fisher has nurtured organic growth through category leadership in lab instruments, consumables, bioproduction, and analytical services. Its broad base of customers ranging from pharma giants to universities to government labs, creates durability across economic cycles.

Non-discretionary demand: scientific discovery and medical research don’t pause for recessions. That reality has allowed Thermo Fisher to weather downturns far better than most industrial or tech peers. Its core products and services are essential infrastructure for global health innovation.


A Mispriced Compounder?

At current levels, Thermo Fisher trades at a meaningful discount to its historical valuation multiples, despite maintaining strong cash flow generation, high returns on capital, and defending its dominant market position. As mitigation plans take effect and macro clarity returns, the market may begin to re-rate the stock more in line with its long-term trajectory.

This is a story we have seen play out before, and it is a pattern which we think will rhyme, if not repeat. Thermo Fisher has faced many macro disruptions over its lifetime, and it has emerged stronger from each stress test. That is what has led it to deliver >14% annualized stock returns through multiple business cycles.



The Bottom Line

Thermo Fisher’s recent underperformance reflects temporary noise but not a structural unraveling. For long-term investors seeking compounders with pricing power, essential demand, and strategic depth, the recent drawdown presents an attractive entry point.

The business model remains intact. The growth strategy is active. And the history is clear: this is a company that compounds through volatility, not in spite of it, but because of it.


Visit our website to learn more about the Cordis Global Medical Technology Fund and our investment strategy.

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This report was prepared by Cordis Asset Management Pty Ltd ABN 68 637 078 490 a corporate authorised representative (No. 1282680) of Avenir Capital Pty Ltd ACN 150 790 355, AFSL 405469 ("Cordis")”, the investment manager for the Cordis Medical Technology Fund (“Fund”). Equity Trustees Limited (“Equity Trustees”) ABN 46 004 031 298 AFSL No. 240975, is a subsidiary of EQT Holdings Limited ABN 22 607 797 615, a publicly listed company on the Australian Securities Exchange (ASX:EQT), and is the Responsible Entity of the Fund. This document has been prepared for the purpose of providing general information only, without taking account of any individual person’s investment objectives, financial circumstances or needs. Whilst every care has been taken in the production of this document, no warranty is given as to its accuracy and persons relying on this information do so at their own risk. The information contained in this document is not intended to be relied upon as a forecast and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy, nor is it investment advice. Any forwarding-looking statements or forecasts are based on reasonable assumptions, but cannot be relied upon as guarantees or representation as to what future performance will actually occur. Unless otherwise specified, the information contained in this document is current as at the date of issue and all amounts are in Australian Dollars (AUD). You should consider the Product Disclosure Statement (“PDS”) in deciding whether to acquire, or continue to hold, the product. A PDS and application form is available at www.cordisam.com. Cordis and Equity Trustees do not guarantee the performance of the Fund or the repayment of the investor’s capital. To the extent permitted by law, neither Equity Trustees, Cordis, nor any of their related parties including its employees, directors, consultants, advisers, officers or authorised representatives, are liable for any loss or damage (including consequential loss or damage) arising directly or indirectly as a result of reliance placed on the contents of this report. Past performance is not indicative of future performance. The unit price performance calculation methodology follows the FSC Standard No.6: Investment Option Performance - Calculation of Returns (July 2018). Total returns are calculated based on changes in net asset values, at the exit price after the deduction of fees and expenses. Due to individual circumstances, your net returns may differ from the net returns quoted above.

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Jacob Celermajer
Portfolio Manager
Cordis Asset Management

Cordis is a boutique Australian fund manager focused on the medical technology sector. As Australia's pre-eminent medical technology investment manager, we try to understand the nuance of medtech by building our circle of competence deep rather...

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