Thermo Fisher Scientific (NYSE:TMO) has been one of the more stable investments on the markets this year. The healthcare company's stock is down about 4% in 2020, less than the S&P 500's 6% decline. With the U.S. Food and Drug Administration (FDA) granting emergency use authorization (EUA) for the company's COVID-19 test, this could be one of the few stocks that's a good buy both during and after the pandemic. Let's take a closer look at the stock to see whether you should consider adding Thermo Fisher to your portfolio today.

COVID-19 has had mixed results on the company's financials thus far

Thermo Fisher released its first-quarter fiscal 2020 results on April 22. In Q1, there wasn't a whole lot of growth for the company, as sales were up just 1.7% from the prior-year period.

On Thermo Fisher's earnings call, Senior Vice President and CFO Stephen Williamson noted that the company has seen both headwinds and tailwinds from the pandemic. While it has benefited from additional research and testing for the coronavirus, it has also seen sales slow down as some customers have been unable to work. Williamson estimates that the overall impact on the company's financials was a bit of a loss, costing it about 3% worth of sales growth for the quarter.

Scientists working in a lab.

Image source: Getty Images.

The company still reported a positive net income figure of $788 million, down 3.3% from the $815 million Thermo Fisher reported during the same quarter a year ago. 

Will these trends continue?

It's hard to predict the impact that COVID-19 will have on Thermo Fisher -- whether it will remain a net negative to the company's financials, or whether that will change as cities begin to reopen.

On May 12, the FDA expanded the EUA it granted Thermo Fisher's COVID-19 tests, which will result in more throughput and more labs running the tests. CEO Marc N. Casper stated, "With this expanded authorization, additional instrumentation can be brought online in labs around the world and the number of tests they can run will increase, which will help to support the need for more testing as people start returning to work."

The FDA gave EUA approval to the company's Applied Biosystems TaqPath COVID-19 Combo Kit back in March, expanded it in April, and expanded it again in May. Thermo Fisher is also working with WuXi Diagnostics and the Mayo Clinic to develop an antibodies test that will determine exposure to the coronavirus.

Thermo Fisher's role in COVID-19 will boost its sales in future periods as the need for quick and reliable testing increases during city reopenings. But it's difficult to determine how much more revenue that will generate and whether it will be enough to offset possible declines in its core business.

One reason: Thermo Fisher is not the only option for testing. Abbott Laboratories (NYSE:ABT) and Roche Holding (OTC:RHHB.Y) are some of the bigger names involved in COVID-19 testing that have received EUA for their tests.

Overall, it's likely that COVID-19 tests will give Thermo Fisher an influx of sales, but it's not clear whether that will outweigh the headwinds from an economic recession, particularly one in which people will likely defer testing that's not absolutely necessary.

In the second quarter, investors should get a better idea of what the net impact may be over a longer period.

Is the stock investable without a positive impact from COVID-19?

Without a net tailwind from COVID-19, investors may wonder if there's any reason to buy the stock. If it's no better off as a result of the added testing from the coronavirus, then Thermo Fisher is essentially the stock it was before COVID-19: one of low growth. But that's also arguably how investors should look at the stock, since any boost from COVID-19 wouldn't be likely to last for long. 

With and without COVID-19, Thermo Fisher has been a profitable company. Its margins for eight straight quarters have been at least 12% or higher. Unfortunately, during that time, there has also been limited growth, as quarterly sales have remained within a range of $5.9 billion to $6.8 billion.

Its organic sales growth may take a hit over the near term, given that millions of Americans are out of work and have lost healthcare coverage. There could be less demand for testing as patients look to keep costs down during a recessionary period. That may not bode well for the company and will likely weigh down its sales numbers, at least over the short term.

For growth investors, there needs to be a net positive effect from COVID-19 to make this stock an attractive investment opportunity.

Should you buy Thermo Fisher?

It's not clear whether Thermo Fisher's organic business may suffer from fewer people having healthcare coverage. Without much in the way of growth, it's a question of whether the stock is a good value buy and if its dividend can tip the scales.

Unfortunately, with a dividend yield of just 0.25%, investors looking for recurring income aren't going to rush out to buy shares of Thermo Fisher. The average S&P 500 stock offers a much higher payout of 2% per year. Investing in the index will give investors much more diversification.

From a valuation perspective, there's also little reason to buy the stock, as it's not far from its 52-week high of more than $356. It's currently trading at more than 38 times earnings and about 5 times its book value. Those are hefty multiples for a stock that may see limited future revenue growth. 

Overall, there's just not a compelling reason to invest in Thermo Fisher's stock today. There are better healthcare stocks out there that pay better dividends or offer more growth.