Bernstein Resumes Thermo Fisher Coverage, Sees Improving Life Science Tools Sector
Key Insights
Bernstein (search) resumed coverage of Thermo Fisher Scientific (search) with a Market Perform rating and a $520 price target on June 26, citing broad sector improvement.
New drug approvals, clinical trial starts, and funding have all increased over the past 12 months compared to the prior year, according to the firm's research note.
Bernstein (search) expects stronger funding to translate into higher customer spending, with additional support from re-shoring efforts and AI-driven semiconductor tool demand.
The life science tools and diagnostics sector is showing clear signs of recovery, according to a June 26 research note from Bernstein (search), which resumed coverage of Thermo Fisher Scientific (search) Inc. (NYSE:TMO) with a Market Perform rating and a $520 price target. The analyst, returning from maternity leave, noted that "Many things" are going right for the sector, pointing to measurable improvements across new drug approvals, clinical trial initiations, and funding levels over the past 12 months relative to the preceding year.
Bernstein (search)'s outlook suggests the improved funding environment will soon begin translating into higher customer spending across the life science tools landscape. The firm also highlighted two additional tailwinds: re-shoring efforts that are expected to support further investment, and growing AI-driven demand for semiconductor-related tools, a segment in which Thermo Fisher maintains meaningful exposure.
Thermo Fisher Scientific (search) focuses on advancing life sciences research, solving complex analytical challenges, improving laboratory productivity, and supporting patient health through diagnostics and the development and manufacturing of life-changing therapies.
Analyst Perspectives Diverge on Sector Timing
The Bernstein (search) note follows closely on the heels of Piper Sandler (search)'s June 11 initiation of TMO coverage with a Neutral rating and a $510 price target. Piper Sandler described its entry into the life science tools sector as a "feet in the shallow end of the pool" approach, signaling measured optimism tempered by caution.
Piper Sandler (search) singled out Twist Bioscience (search) as its sole recommended buy in the space, citing the company's growing exposure to next-generation drug discovery and development. The firm acknowledged that headwinds from biotech and academic spending, along with exposure to China, are likely to improve in the near term. However, Piper's analyst indicated a preference to wait for the next major growth drivers to materialize before broadening its recommendations.
"Investors can buy multi-year growth compounding stocks early, middle, and late into their growth cycles but would simply prefer to wait out a couple quarters for the sector to perform like it did pre-COVID," Piper Sandler (search) stated in its research note.
Broader Implications for Pharmaceutical R&D
The improving metrics cited by Bernstein (search) — rising drug approvals, accelerating clinical trial starts, and strengthening funding — carry direct implications for the pharmaceutical research and development ecosystem. Life science tools and diagnostics companies like Thermo Fisher serve as critical infrastructure providers, and their performance often serves as a leading indicator of R&D activity across the biopharmaceutical industry.
The convergence of re-shoring trends and AI-driven demand adds a structural dimension to what might otherwise be viewed as a purely cyclical recovery, suggesting that multiple forces are aligning to support sustained growth in the sector.