Thermo Fisher Scientific Inc.

The stable ratings outlook reflects our expectation of Thermo Fisher's continued strong competitive positions in the expanding life sciences industry, solid mid-single-digit percent organic revenue growth, and consistently strong profitability, producing solid strong discretionary cash flow of around $4 billion a year. This enables the company to quickly deleverage following major acquisitions and maintain adjusted net leverage of 3x-4x. Given the company's strong leading market positions, diversified product portfolio, customer base, and end markets--and our expectations for solid organic growth and sustained profitability--a downgrade would likely follow a shift to a more aggressive financial policy. Should Thermo Fisher accelerate its acquisition pace and adjusted net leverage is sustained meaningfully above 4x for an extended period, we would consider a downgrade.

...The leading breadth and depth of its life sciences product portfolio will help the company retain and expand its market share. With annual revenues of over $25 billion, Thermo Fisher Scientific Inc. is one of the largest players in the life sciences industry. The market is highly competitive. However, Thermo Fisher benefits from multiple leadership positions, a strong brand name, and a reputation with one of the broadest product and service portfolios. The company's broad offering and strong distribution network enable customers to more efficiently source products and services. The portfolio continues to increase, as the company aggressively launches new products and enters new adjacent businesses via acquisitions. Stable and diverse end markets will drive steady revenue growth, with high-margin consumables and services accounting for around 70% of sales, driving increased revenue visibility and margin growth.Thermo Fisher has market leading size, scale, and diversity of products, end markets,...

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