Citi analysts bullish on Danaher stock with new 90-day view

On Tuesday, Citi analysts initiated a 90-day upside short-term view on Danaher Corporation (NYSE:DHR), expressing a more constructive stance towards the company’s prospects. Currently trading near its 52-week low at $205.69, with a market capitalization of $147 billion, the company maintains a GOOD financial health score according to InvestingPro analysis. The analysts highlighted several factors that contribute to their positive outlook, including conservative guidance for the bioprocessing sector, recent cost-saving measures, and robust respiratory trends that could benefit the Diagnostics division.

Danaher, a prominent player in the Life Sciences Tools & Services industry with annual revenue of $23.88 billion, has been under scrutiny for its financial performance and market positioning. While trading at a relatively high P/E ratio of 38.5x, the company has demonstrated strong cash flow generation with $5.3 billion in levered free cash flow over the last twelve months. In their assessment, Citi analysts referred to the company’s first-quarter bioprocessing guide of 6-7% growth as conservative, given the favorable sector trends supported by recent data from peers such as Avantor (NYSE:AVTR), Sartorius, and Repligen (NASDAQ:RGEN).

The analysts also pointed to the cost-out initiatives outlined in Danaher’s 10-K filing, particularly in the Diagnostics division and Chinese operations, as positive developments. These measures are anticipated to contribute to the company’s financial efficiency and performance.

Furthermore, Citi analysts discussed the initial FY25 operating margin (OPM) guidance of approximately 28.5%, which was presented during the fourth-quarter earnings call. Despite being lower than expected due to value-based pricing (VBP) and foreign exchange (FX) headwinds, analysts believe that the projected $150 million in savings could counterbalance the same amount of VBP pressure. This could result in more than 50 basis points of margin upside to the guidance, which already includes some conservatism regarding bioprocessing margins, expected to reach around 40%.

Lastly, Citi’s analysis suggested that elevated respiratory trends could offer potential upside for Danaher’s Diagnostics division and overall company margins for the first quarter. This observation is based on current market conditions and the company’s recent performance in this area.

Danaher Corporation has not publicly responded to Citi’s 90-day upside short-term view. The company’s stock performance following this outlook will be closely monitored by investors seeking to gauge the impact of the analysts’ positive sentiment on market behavior.

In other recent news, Danaher Corporation reported its fourth-quarter 2024 earnings, showing a slight miss in earnings per share (EPS) but surpassing revenue expectations. The company posted an EPS of $2.14, just below the anticipated $2.15, while revenue reached $6.54 billion, exceeding the forecast of $6.39 billion. In another development, Danaher announced an 18.5% increase in its quarterly cash dividend, raising it from $0.27 to $0.32 per share. The dividend is scheduled for payment on April 25, 2025, to shareholders of record as of March 28, 2025. Additionally, Danaher appointed Charles W. Lamanna to its Board of Directors, where he will serve until the 2025 annual meeting of shareholders. The company also amended its 2007 Omnibus Incentive Plan to ensure that unvested stock options and restricted stock units vest fully upon an employee’s death or disability. Furthermore, TD Cowen analysts upgraded Danaher’s stock rating, highlighting the company’s growth potential in the bioproduction sector. These developments reflect Danaher’s ongoing strategic initiatives and its commitment to delivering value to shareholders.

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