Analyzing Market Sentiment Behind TMO's Price Surge

One of the standouts of today's evening trading session was Thermo Fisher Scientific, which logged a 1.3% performance and outperformed the S&P 500 by 1.0%. The Farm & Heavy Construction Machinery stock is now trading at $564.6 per share and may still have upside potential because it is still -9.84% under its average target price of $626.25. Analysts have set target prices ranging from $553.0 to $670.0 dollars per share, and have given the stock an average rating of buy.

The market seems to share this optimistic view, since Thermo Fisher Scientific has a short interest of only 0.7% (this is the percentage of the share float that is being shorted). Each short position represents an investor's expectation that the price of the stock will decrease in the future.

Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.

Another way to gauge the sentiment on Thermo Fisher Scientific is to look at the percentage of institutions that are invested in the stock. In this case, 90.7% of the shares are held by pension, mutual, and hedge funds, which shows that these institutions probably have strong confidence in the stock.

If institutions are invested in a particular stock, it shows in most cases that they have performed quality research and concluded that it is a good investment. In some cases, however, increases in institutional ownership could be a sign of a takeover attempt or proxy fight, which can actually injure share prices. Also, institutions are not infallible, and can certainly make miscalculations -- often with spectacular results.

Overall, there is mixed market sentiment on Thermo Fisher Scientific because its an analyst consensus of some upside potential, a buy rating, a very low short interest, and a significant number of institutional investors. Warren Buffett famously said that in the short term, markets are voting mechanisms, but in the long term, they are weighing mechanisms. This means that long term investors should be aware of a stock's fundamentals before committing.

Buffett was one of the fist investors to focus on free cash flow as a yardstick for a company's health. Here are TMO's recent cash flows:

Date Reported Cash Flow from Operations ($ k) Capital expenditures ($ k) Free Cash Flow ($ k) YoY Growth (%)
2023 8,406,000 1,479,000 6,927,000 0.23
2022 9,154,000 2,243,000 6,911,000 1.8
2021 9,312,000 2,523,000 6,789,000 -0.38
2020 8,289,000 1,474,000 6,815,000 68.4
2019 4,973,000 926,000 4,047,000 6.92
2018 4,543,000 758,000 3,785,000
The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.