Thermo Fisher, Danaher Could Log Mid-Single-Digit Organic Revenue Growth in 2027, UBS Says
Thermo Fisher Scientific (TMO) and Danaher (DHR) are likely to return to mid-single-digit organic revenue growth in 2027, UBS Securities said in separate notes e-mailed Wednesday.Thermo Fisher is expected to "durably return" to organic revenue gain of at least 5% to 6% next year, expand its operating margin by at least 50 to 70 basis points and generate double-digit per-share earnings growth, UBS analyst Douglas Schenkel wrote in a note to clients.The medical device manufacturer's core end markets have "largely rebounded with structural tailwinds in place," Schenkel said. UBS sees "some green shoots" in the company's tail exposures that have been slower to improve.Factors such as improved funding, investment reshoring, and continued robust demand for bioprocessing tools and services should help Thermo Fisher generate mid-single- to high-single-digit revenue growth, the brokerage said. The company is expected to benefit from stabilization in China, along with other factors, according to the note."We believe 5.5% to 7% core revenue growth is achievable without assuming a material improvement in the (academic and government) end market," Schenkel said.In July, Thermo Fisher posted stronger-than-expected second-quarter results.Separately, UBS said it sees Danaher returning to low-single-digit organic growth in 2026 and mid-single-digit next year. Capital deployment is likely to bridge medical equipment maker back toward its high-single-digit algorithm, an inflection that the brokerage said could rebuild the company's historical valuation premium.Investor patience with Danaher is "quite low" amid its latest bioprocessing slip in the second quarter, Schenkel wrote in a separate note. During an earnings call in July, the company flagged a "conservative" outlook for the bioprocessing segment, due to "some of the customer-driven timing dynamics" seen in its second quarter, according to a FactSet transcript.Danaher's bioprocessing division is continuing to recover, while the life sciences business is reaccelerating as end markets normalize, UBS said. The brokerage sees diagnostics growth in a position to re-rate under incoming Chief Executive Julie Montgomery.UBS has buy ratings on the respective stocks of Thermo Fisher and Danaher. The brokerage's rating history shows Thermo Fisher was most recently rated neutral.Price: $605.70, Change: $+2.68, Percent Change: +0.44%
