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BREAKING: U.S. Cardinal Robert Prevost has been elected Pope, taking the name Pope Leo — the first American ever to lead the Catholic Church. https://t.co/62rcvGAlcU
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BREAKING: U.S. Cardinal Robert Prevost has been elected Pope, taking the name Pope Leo — the first American ever to lead the Catholic Church. https://t.co/62rcvGAlcU
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Dimitry Nakhla | Babylon Capital®
A quality valuation analysis on $TMO 🧘🏽♂️
•NTM P/E Ratio: 17.84x
•10-Year Mean: 22.02x
•NTM FCF Yield: 4.97%
•10-Year Mean: 4.16%
As you can see, $TMO appears to be trading below fair value
Going forward, investors can receive ~23% MORE in earnings per share & ~19% MORE in FCF per share 🧠***
Before we get into valuation, let’s take a look at why $TMO is a great business
BALANCE SHEET🆗
•Cash & Short-Term Inv: $5.95B
•Long-Term Debt: $31.24B
$TMO has a good balance sheet (acquisitions a big growth driver), a A- S&P Credit Rating & 6x FFO Interest Coverage
RETURN ON CAPITAL✅*
•2019: 8.3%
•2020: 13.4%
•2021: 12.8%
•2022: 10.3%
•2023: 8.7%
•2024: 9.2%
*lower ROIC due to acquisition strategy
RETURN ON EQUITY✅
•2019: 12.9%
•2020: 19.9%
•2021: 20.5%
•2022: 16.4%
•2023: 13.1%
•2024: 13.1%
$TMO has strong return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2014: $16.89B
•2024: $42.88B
•CAGR: 9.76%
FREE CASH FLOW✅
•2014: $2.19B
•2024: $7.27B
•CAGR: 12.74%
NORMALIZED EPS✅
•2014: $6.96
•2024: $21.86
•CAGR: 12.12%
SHARE BUYBACKS🆗
•2019 Shares Outstanding: 403.00M
•LTM Shares Outstanding: 381.00M
MARGINS✅
•LTM Gross Margins: 41.4%
•LTM Operating Margins: 18.3%
•LTM Net Income Margins: 15.2%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~23% MORE in EPS & ~19% MORE in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $TMO has to grow earnings at an 8.92% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2027 EPS growth over the next few years to be slightly less than the (8.92%) required growth rate:
2025E: $22.47 (2.8% YoY) *FY Dec
2026E: $24.84 (10.6% YoY)
2027E: $27.73 (11.6% YoY)
$TMO has an excellent track record of meeting analyst estimates ~2 years out, let’s assume $TMO ends 2027 with $27.73 in EPS & see its CAGR potential assuming different multiples
24x P/E: $665.52💵 … ~20.0% CAGR
23x P/E: $637.79💵 … ~18.1% CAGR
22x P/E: $610.06💵 … ~16.2% CAGR
21x P/E: $582.33💵 … ~14.1% CAGR
20x P/E: $554.60💵 … ~12.1% CAGR
As you can see, $TMO appears to have attractive return potential IF we assume >20x earnings and strong return potential at 22x
Despite $TMO’s earnings dip from 2020-2023 due to pandemic-driven booms followed by biopharma funding & tariff fears, its proven track record of steady growth, among other things, signals a return to normalcy once these overhangs clear
$TMO is an excellent business with a wide moat & will benefit from future ongoing sector demand (AI tailwinds in scientific research), especially their next-gen sequencing machines & chromatography machines
Today at $414💵, $TMO is a strong consideration for investment with a large margin of safety
___
𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.
𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.
𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞�[...]
A quality valuation analysis on $TMO 🧘🏽♂️
•NTM P/E Ratio: 17.84x
•10-Year Mean: 22.02x
•NTM FCF Yield: 4.97%
•10-Year Mean: 4.16%
As you can see, $TMO appears to be trading below fair value
Going forward, investors can receive ~23% MORE in earnings per share & ~19% MORE in FCF per share 🧠***
Before we get into valuation, let’s take a look at why $TMO is a great business
BALANCE SHEET🆗
•Cash & Short-Term Inv: $5.95B
•Long-Term Debt: $31.24B
$TMO has a good balance sheet (acquisitions a big growth driver), a A- S&P Credit Rating & 6x FFO Interest Coverage
RETURN ON CAPITAL✅*
•2019: 8.3%
•2020: 13.4%
•2021: 12.8%
•2022: 10.3%
•2023: 8.7%
•2024: 9.2%
*lower ROIC due to acquisition strategy
RETURN ON EQUITY✅
•2019: 12.9%
•2020: 19.9%
•2021: 20.5%
•2022: 16.4%
•2023: 13.1%
•2024: 13.1%
$TMO has strong return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2014: $16.89B
•2024: $42.88B
•CAGR: 9.76%
FREE CASH FLOW✅
•2014: $2.19B
•2024: $7.27B
•CAGR: 12.74%
NORMALIZED EPS✅
•2014: $6.96
•2024: $21.86
•CAGR: 12.12%
SHARE BUYBACKS🆗
•2019 Shares Outstanding: 403.00M
•LTM Shares Outstanding: 381.00M
MARGINS✅
•LTM Gross Margins: 41.4%
•LTM Operating Margins: 18.3%
•LTM Net Income Margins: 15.2%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~23% MORE in EPS & ~19% MORE in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $TMO has to grow earnings at an 8.92% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2027 EPS growth over the next few years to be slightly less than the (8.92%) required growth rate:
2025E: $22.47 (2.8% YoY) *FY Dec
2026E: $24.84 (10.6% YoY)
2027E: $27.73 (11.6% YoY)
$TMO has an excellent track record of meeting analyst estimates ~2 years out, let’s assume $TMO ends 2027 with $27.73 in EPS & see its CAGR potential assuming different multiples
24x P/E: $665.52💵 … ~20.0% CAGR
23x P/E: $637.79💵 … ~18.1% CAGR
22x P/E: $610.06💵 … ~16.2% CAGR
21x P/E: $582.33💵 … ~14.1% CAGR
20x P/E: $554.60💵 … ~12.1% CAGR
As you can see, $TMO appears to have attractive return potential IF we assume >20x earnings and strong return potential at 22x
Despite $TMO’s earnings dip from 2020-2023 due to pandemic-driven booms followed by biopharma funding & tariff fears, its proven track record of steady growth, among other things, signals a return to normalcy once these overhangs clear
$TMO is an excellent business with a wide moat & will benefit from future ongoing sector demand (AI tailwinds in scientific research), especially their next-gen sequencing machines & chromatography machines
Today at $414💵, $TMO is a strong consideration for investment with a large margin of safety
___
𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.
𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.
𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞�[...]
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RT @wallstengine: Morgan Stanley sees AI infrastructure spend topping $3T by 2028. That includes $2.6T on data centers (chips + servers), $210–330B on new power generation, and likely hundreds of billions more for grid upgrades. https://t.co/TkO2JXuVTx
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RT @wallstengine: Morgan Stanley sees AI infrastructure spend topping $3T by 2028. That includes $2.6T on data centers (chips + servers), $210–330B on new power generation, and likely hundreds of billions more for grid upgrades. https://t.co/TkO2JXuVTx
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$GOOGL is now down 🔻24% from its February peak, driven by concerns over AI’s impact on search.
What are your thoughts on $GOOGL right now? https://t.co/GYOHg0VEHS
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$GOOGL is now down 🔻24% from its February peak, driven by concerns over AI’s impact on search.
What are your thoughts on $GOOGL right now? https://t.co/GYOHg0VEHS
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Bank of America is sticking with its Buy rating on $GOOGL arguing the core Google Ads & Play businesses trade at just 9x 2026E earnings, well below the S&P 500’s 20x, which they see as compelling value (based on $285 in estimated GAAP EPS for 2026).
That valuation excludes contributions from YouTube, Cloud, Waymo, cash, and still-bleeding Other Bets—so there’s plenty of optionality.
BoA also highlights that total queries are growing, including on Apple devices, potentially thanks to tools like Circle to Search, image and voice search, the Google app, and Gemini.
On the Apple Safari TAC deal, they estimate it made up about 26% of 2025 net search revenue and 30% of profits, assuming gross revenue from Safari grew 44% over three years. But even with that risk, they believe the downside is priced in—with $GOOGL trading at just 15x 2026 earnings.
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Bank of America is sticking with its Buy rating on $GOOGL arguing the core Google Ads & Play businesses trade at just 9x 2026E earnings, well below the S&P 500’s 20x, which they see as compelling value (based on $285 in estimated GAAP EPS for 2026).
That valuation excludes contributions from YouTube, Cloud, Waymo, cash, and still-bleeding Other Bets—so there’s plenty of optionality.
BoA also highlights that total queries are growing, including on Apple devices, potentially thanks to tools like Circle to Search, image and voice search, the Google app, and Gemini.
On the Apple Safari TAC deal, they estimate it made up about 26% of 2025 net search revenue and 30% of profits, assuming gross revenue from Safari grew 44% over three years. But even with that risk, they believe the downside is priced in—with $GOOGL trading at just 15x 2026 earnings.
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