Thermo Fisher Scientific (TMO) could benefit from improving end-market conditions and recovering biotech funding, though "structural risks" may limit the company's ability to achieve its long-term organic growth aspiration, RBC Capital Markets said in a report emailed Friday.

"Investor skepticism" surrounding Thermo Fisher's 2026 guidance and broader post-pandemic recovery trends "is well-founded" after several years of uneven "normalization" across the life sciences tools industry, RBC noted. Still, the firm said recovery prospects appear "more plausible" as uncertainty in large pharmaceutical and academic markets begin to ease.

The firm said normalized organic growth closer to 5% may be as likely as management's 7%-plus target and the Wall Street's roughly 6% forecast. It also pointed to "lingering" artificial intelligence uncertainty surrounding the long-term outlook for the company's contract research organization business, which represents about 20% of sales, according to the report.

RBC resumed coverage of Thermo Fisher with a sector perform rating and a $490 price target.

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