TMO: Recovery within Reach but Risks Remain; Resume Coverage at Sector Perform

Research evidence excerpt

TMO: Recovery within Reach but Risks Remain; Resume Coverage at Sector Perform

ifficult to construct — particularly

given lingering AI uncertainty around the long-term growth trajectory of AllPricedvaluesas ofin priorUSD unlesstradingotherwiseday's marketnoted.close, EST (unless otherwise noted).

Thermo's CRO business, which represents roughly 20% of sales.

Thermo's multiple looks cheap relative to history. Thermo's current P/E

ratio of ~17.5x forward earnings is nearing 5- and 10-year lows, on both an

absolute basis and relative to the S&P 500.

But has the playbook changed? Thermo built its reputation on

transformative product M&A — Life Technologies being the standout —

and a track record of strong operational execution. With fewer compelling

product targets remaining and questions lingering around its significant

push into services over the past decade, some degree of multiple

compression relative to history seems warranted, in our view. Layered

on top is the AI overhang, which has introduced a degree of concern

around Thermo that is difficult to price and harder to dismiss. Whether

management can meaningfully shift that narrative at its May 20th analyst

day remains to be seen.

Valuation: Our $490 price target, which supports our Sector Perform rating,

is based on a 16x EV/EBITDA, a premium to its peer group median EV/

EBITDA of ~13x, which we believe warranted given Thermo's industry

leadership as well as structurally lower tax rate, a feature not captured in

the EV/EBITDA method.

Disseminated: May 14, 2026 16:02EDT; Produced: May 14, 2026 16:00EDT

For Required Conflicts Disclosures, see page 7

RBC Capital Markets appreciates your consideration in the 2026 Extel All-America and All-Canada Research Team survey.