UBS Upgrade Collides with Rising Shorts on Thermo Fisher

Three distinct signals have converged on TMO this week. An analyst upgrade, a short interest jump, and elevated put-buying are all pointing in different directions at once.

Analyst Makes a Bold Call

UBS analyst Doug Schenkel upgraded TMO to Buy from Neutral on September 9. The new price target is $730 — up from $540. That implies 21% upside from the stock's current price near $603.

It isn't a solo call. CLSA's Michael Luo initiated coverage with an Outperform rating and a $748 target just days earlier, on September 3. The consensus is Buy, with 20 analysts bullish against only 4 at Hold. The mean price target stands at $645.

The bull case centers on a 5.4% annual growth rate in life science solutions and 8.5% adjusted EPS growth over four years. The Clario acquisition is seen strengthening the CRO business as biopharma outsourcing accelerates.

Bears point to a different set of numbers. Adjusted EBIT margin has fallen 830 basis points since 2021, to 22.6%. Adjusted gross margin has dropped 940 basis points from its 2019 peak. Biotech funding headwinds haven't gone away.

Shorts Add Positions Into the Upgrade

Short interest jumped 22.4% on September 10 — a single-session surge to 5.7 million shares. That puts SI at 1.5% of free float. The level is low in absolute terms, but the speed of the move stands out.

Shorts have been gradually covering since early August, when shares short were running above 5 million. They rebuilt that position in one day. The borrow market is not a constraint. Availability remains extremely deep — with over 334 million shares available to lend, there is no friction for new short positions to be established.

Cost to borrow sits at 0.41%, unchanged in direction. Shorts are not paying a premium to express this view.

Options Market Adds a Cautious Tone

The put-call ratio hit 0.86 on September 10. That's above the 20-day mean of 0.78. The z-score has moderated from the 2.2 reading flagged earlier in the week, sitting at 1.3 as of the latest data. The options market is leaning defensive — not aggressively so, but the drift toward puts began in early August and has continued.

Earnings are due October 21. The last two prints both moved the stock more than 7% on the day.

Data Summary

• UBS upgrade: Buy, $730 PT (vs. $540 prior), +21% implied upside from $603
• CLSA initiation: Outperform, $748 PT (September 3)
• Analyst consensus: 20 Buy / 4 Hold; mean target $645
• Short interest: 1.5% of free float; +22.4% in one session (Sep 10)
• Borrow availability: Extremely loose — 334M shares available
• Cost to borrow: 0.41%, low
• Put-call ratio: 0.82, z-score 1.3 above 20-day mean
• Next earnings: October 21