Based on the provided data and recent analyst reports, here's a comprehensive analysis of TMO's valuation:
Technical Analysis
The stock is currently showing bearish momentum with RSI at 40.00 and MACD divergence (-7.32, -5.36), indicating downward pressure. The stock is trading below both its 200-day SMA ($569.08) and 250-day SMA ($570.00), suggesting a bearish trend.
Fundamental Valuation
The stock appears overvalued based on several metrics:
Declining Growth: Revenue decreased from $44.9B (2022) to $42.8B (2023), representing a -4.6% YoY decline.
Margin Compression:
- Gross margin declined from 42.24% to 39.90%
- Net margin decreased from 15.50% to 13.90%
- ROE dropped from 16.40% to 13.22%
- Multiple Expansion: Despite weaker fundamentals, valuation multiples have increased:
- P/E ratio increased from 31.22 (Q4 2022) to 34.35 (Q4 2023)
- EV/EBITDA expanded from 20.22 to 21.57
Recent Analyst Views
According to recent analyst reports:
- Jefferies maintains Buy rating with positive outlook on margin expansion
- Bank of America Securities maintains Buy rating with $660 price target
- However, these ratings were given before the recent market decline
Conclusion: TMO appears overvalued at current levels due to:
- Deteriorating fundamental metrics
- Trading at premium multiples despite growth challenges
- Technical indicators showing bearish momentum
- Current price ($532.55) still represents high multiples relative to declining growth