Amidst stagnant revenue and a recently slashed growth forecast, Thermo Fisher Scientific (TMO 0.33%) is having a rough 2023. Its shares are down by 19% so far this year, a startling departure from its norm of consistent gains and frequent outperformance.

There's little in the way of big growth catalysts on the radar. Management hasn't signaled that any major changes to strategy are incoming. So is Thermo Fisher at risk of turning an investment into dead money, or is it just an evergreen stock that's passing through stormy weather?

What's the problem?

Thermo Fisher's troubles in 2023 are best understood as a combination of factors beyond its control and becoming a victim of its own success. Because it's a major supplier to the biopharma industry for everything from laboratory hardware and reagents to sophisticated and specialized diagnostics for use in hospitals, shareholders are now paying the price for both its ability to innovate in response to emerging opportunities and for its position at the top of the value chain in the healthcare sector.

In the third quarter, the company brought in $10.6 billion, down 1% from a year prior. Its COVID-19 test sales were negligible in comparison to its trailing-12-month sales of $43.4 billion. Compare that to the third quarter of 2021, when sales of COVID diagnostics, which were at the time a major driver of top-line growth, brought in more than $2 billion.

That makes sense as a couple of years ago the pandemic was still in full swing, and rapid tests for SARS-CoV-2 were a brand-new product segment, stoking huge growth. As demand for testing has ebbed, this has limited the top line's continued expansion in the short term. The good news is that there's essentially no more market share left to lose, so the damage is contained.

The other problem is that the macroeconomic picture is weakening. As biopharma businesses feel more jittery due to inflation and the rising cost of borrowing money, they may be slowing additions to their research and development (R&D) budgets. That means buying fewer scientific instruments like mass spectrometers, specialized freezers, and cell analyzer devices, which as a segment make up 18% of Thermo Fisher's revenue. It might also mean curbing some spending on pricier consumables, chemicals, and reagents, not to mention consultation services.

There isn't much that the company can do to ease pressures for its customers, aside from accepting lower profits by lowering the price of its goods. As a consequence, management revised revenue guidance from a midpoint of $45.3 billion to a new midpoint of $42.7 billion, which could make 2023 the first year in a long time in which Thermo Fisher fails to bring in more revenue than it did the prior year.

This dip is a prime buying opportunity

As troublesome as blustering economic headwinds may be for shareholders, Thermo Fisher's weak performance this year says very little about the stock's long-term potential. The economy will eventually improve, and inflation will eventually fall (or be consistent enough to be factored into a new normal). Likewise, it's inevitable that new product lines will drive fresh revenue growth to replace the losses of the COVID testing segment.

Thermo Fisher serves a steadily expanding biopharma market that's larger than $240 billion annually, and its massive scale gives it an advantage in finding areas of unexploited demand. And nothing about its last few quarters indicates that its competitive advantage of being one of the most trusted brands in biopharma is under any threat whatsoever. Nor will it stop being the supplier of choice for a vast number of different laboratory and healthcare products. So the bad times are temporary.

That supports the idea that it might be a smart time to consider buying the stock. At the moment, its price-to-earnings (P/E) ratio of 29 and its price-to-sales (P/S) ratio of 4 are slightly lower than in March 2020, during the depths of the coronavirus stock-market crash. The level of economic uncertainty now is considerably lower than then, even if it's higher than before the pandemic. Thermo Fisher's profit margin is also higher now than it was then.

So yes, Thermo Fisher is still very much worth buying. Its stock may still decline a bit in the near term as the economy sputters. But it has enduring and deep connections with its market, and a favorable valuation. So in the long run, it's likely to be a relatively safe and decently performing investment.